German tenants continue to bear brunt of CO2 tax under new energy law

The German Tenants Association has expressed anger at the government's failure to ensure that the cost of the CO2 price is shared equally among tenants and landlords in its amendment to the heating costs law.

A thermostat. Photo: picture alliance / Jens Büttner/dpa-

On Friday, the Bundesrat – Germany’s upper house of parliament – voted through an amendment to the heating costs regulation that will implement new EU requirements on energy efficiency. 

But the tenants’ association has criticised the fact that the new regulation fails to scrap the one-sided CO2 tax, a green levy on carbon dioxide use that currently falls entirely on the shoulders of tenants.

“This leads to significantly higher heating costs, especially for tenant households in buildings that are not renovated,” Weber-Moritz told DPA. 

The CDU/CSU and SPD-led federal government had previously agreed that the additional heating costs caused by the CO2 price would be borne equally by landlords and tenants.

However, this proposal ultimately collapsed due to opposition from the CDU/CSU parliamentary group.

That means that tenants have been bearing the entire brunt of the €25-per-tonne CO2 tax alone since it was introduced at the start of the year.

Slamming the decision not to split the levy between landlords and renters, the tenants’ association said transferring the costs of the CO2 tax entirely to tenants could limit its effectiveness as a green tax.

The incentive effect of the CO2 pricing, which is intended to make climate protection investments in the building sector more attractive, is “completely lacking” when CO2 costs are passed on to tenants, Weber-Mortiz said. 

It comes as households in Germany are under increased financial pressure from soaring heating and energy costs, as well as a steep rise in the cost of living over the past six months or so. 

The additional costs could threaten to harm public perception of the transition away from climate-harming fossil fuels to clean, renewable energy, Weber-Moritz warned.

READ ALSO: Should Germany do more to support households with rising energy costs?

End of on-site meter readings

The amendment to the heating costs regulation stipulates that energy companies must be able to read newly installed meters remotely and that older meters must be retrofitted or replaced by the end of 2026.

The regulation is intended to eliminate the need for on-site meter readings.

As soon as the remote-readable meters are installed, tenants should receive information on their consumption every month.

According to the Bundesrat, the aim of the ordinance is to encourage consumers to be “conscious and economical in their use of heating energy” in order to reduce emissions. 

The newly installed meters must also be able to exchange data with devices from other manufacturers. This is to ensure that there is sufficient competition and that metering service companies cannot impose drastic price increases.

In the future, heating bills must also include a comparison that informs people both of their previous energy consumption and average consumption.

Euro notes and coins next to a German heating bill. In future, energy companies will have to be more transparent about usage and costs in their billing. Photo: picture alliance / dpa | Jens Büttner

Weber-Moritz said the new heating cost regulation could help save energy by providing more information on consumption and increased transparency on costs.

“Climate protection in the building sector, however, can primarily only be achieved through energy-efficient modernisation of the building stock,” she explained.

Weber-Moritz added that subsidies to the building sector would have to be increased. 

Furthermore, the tenants’ association is concerned that the regulation does nothing to protect renters against additional costs. 

“There is a fear that tenants will have to pay more for these devices and billing and consumption information than they will save in additional energy costs,” Weber-Moritz explained. 

READ ALSO: How households in Germany can tackle rising energy costs


Unrenovated – unsaniert

Heating cost surcharge – (der) Heizkostenaufschlag

Heating bill – (die) Heizkostenabrechnung 

Meter – (der) Zähler

We’re aiming to help our readers improve their German by translating vocabulary from some of our news stories. Did you find this article useful? Let us know.

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How much extra will households in Germany pay under new gas surcharge?

With a new gas levy set to come info force in October, experts have been looking at how much more people will have to pay - even if they've already agreed contracts. There are also calls for everyone, including non-gas customers, to contribute.

How much extra will households in Germany pay under new gas surcharge?

What’s happening?

As The Local has been reporting, the German government has put together a draft law which will see a ‘Gasumlage‘ – or levy – brought in to prop up struggling suppliers by allowing them to pass on nearly all the extra costs of soaring gas import prices to consumers. 

According to the initial draft, the levy is expected to apply from October 1st 2022 until April 1st 2024. It’s not clear if costs will reach consumers immediately, but bills will rise significantly as a result of the levy. 

READ ALSO: What is Germany’s new gas ‘tax’ and who will pay more?

Who is affected?

Everyone who uses gas to heat their home or business is affected by the new levy. The charge applies even when customers have already signed contracts where a fixed monthly payment is agreed. About half of all homes in Germany use gas for heating and/or hot water.

Wait – so ordinary people now have to pay for the gas supply problems?

Basically – yes. As Russia has been cutting down supplies, the German government says the levy is needed to share the additional costs for replacing the gas.

Under the Energy Security Act, 90 percent of the additional purchase costs of securing gas will be passed on to all gas consumers from October.

If, for instance, Uniper – the largest gas trader in the country – no longer gets enough gas and therefore has to buy on a daily basis and pays three times as much for this resource, then all gas gas consumers in Germany will bear 90 percent of this cost.

READ ALSO: Why households in Germany will soon face gas bill hikes

What cost increases will these gas customers face?

The ‘tax’ will make gas prices more expensive, although, we won’t know the exact amount of the levy until the middle or end of August.

However, we do have an idea of how much the rising costs will be. Energy and Climate Minister Robert Habeck said last week that the levy could be anywhere in the range of 1.5 to 5 cents per kilowatt hour.

For many consumers, this will be an enormous challenge.

A person changing the heating setting on a radiator. The coalition has pledged financial support people in Germany.

Heating prices are going up. Photo: picture alliance/dpa/dpa-Zentralbild | Fernando Gutierrez-Juarez

According to calculations by the internet portal Check24, a one-person household with an annual consumption of about 5,000 kilowatt hours would have to pay between €89 and €298 a year for the levy alone, while a family with a consumption of 20,000 kilowatt hours would have to reckon with additional costs of €357 to €1,190.

Many consumers who have a price guarantee in their contracts may think they won’t have to pay the levy – but they are wrong, warns Udo Sieverding, energy expert at the North Rhine-Westphalia Consumer Advice Centre.

That’s because this guarantee does not protect against state surcharges or levies. “Everyone has to pay,” says the consumer advocate, regardless of their contract or deal with a supplier. 

READ ALSO: ‘Difficult winters ahead’: Germany sets out emergency energy saving measures

Is it unfair to make gas consumers – and not all households – pay the levy?

The price hike only affects gas customers in Germany. So people whose heating or hot water comes from different sources – such as heat pumps or electricity – will not have to pay it. 

However, gas customers have already been dealing with extremely high prices on new contracts recently. Since July last year, prices for a family household have risen from €1,300 to €3,415 a year. 

Including a levy of five cents per kilowatt hour, a household would have to pay an average of €4,605 – 254 percent more than in July 2021.

Sieverding, of the Consumer Advice Centre, thinks this isn’t fair – and Germany should look at introducing tax increases instead of just making gas consumers pay.

“It’s about solidarity for society as a whole, and tax increases would make more sense than a levy,” he said. He also fears that more and more fan heaters will be plugged into the sockets in winter, putting a strain on the electricity grid.

READ ALSO: Should I invest in an electric heater in Germany this winter?

Why do only gas customers have to pay?

According to German media, gas is the scarcest commodity among the energy sources, and the practical implementation of passing the costs onto gas consumers is much easier than putting in place a general tax on everyone.

Plus: a levy that affects everyone is a serious intervention that has to be proportionate and legally secure.

Isn’t Germany meant to be taking the heat off ordinary people?

Yes. The German government has been trying to cushion the blows of rocketing energy prices and subsequent rising inflation. It has taken measures such as introducing the €9 ticket and a fuel tax cut for three months, giving out a Kinderbonus to children in July and is set to give a taxable €300 payout to people in employment from September – and even got rid of the EEG levy on electricity earlier than planned.

So it seems strange that it is actually bringing in a new levy. However, it reflects the dire situation that Germany is in. Having relied on cheaper Russian gas imports for decades, now the country is having to scramble around to find other sources – and ordinary households are paying the price of political decisions and Russian President Vladimir Putin’s actions. 


What are businesses saying?

As you can imagine, they are concerned too. The Federation of German Industries has argued for a price cap, or an opportunity to pay in staggered amounts.

“Otherwise, the gas levy threatens to massively undermine the competitiveness of companies,” the association said. 

The German Energy Industry Association, however, welcomes the levy as a measure to pass on replacement costs quickly and “to preserve the liquidity of the energy supply companies”.

The association also highlighted that the charges “are levied equally on all consumers and without privileging certain customer groups”. This allows for a transparent calculation of the levy and a fair distribution of the burden, they said.