Rising CO₂ prices: Climate money fails to materialize

Rising CO₂ prices: Climate money fails to materialize, demands for compensation grow

The cost of fossil fuels is rising due to the gradual increase in the CO₂ price - and so are heating costs. From 2027, national emissions trading will be integrated into EU-wide trading, which is likely to lead to further price increases. However, the planned climate money to provide social relief for citizens is still a long time coming. Criticism of this is growing louder.

In future, the building sector will also be included in European emissions trading. This threatens to lead to noticeable price increases for oil and gas from 2027. Baden-Württemberg is therefore calling for particularly affected households to be supported with EU funds. Time is of the essence: Applications for these funds must be submitted by the end of June 2025.

While the traffic light coalition had announced a climate money as compensation in the coalition agreement, no concrete steps have been taken to date. The revenue from CO₂ pricing currently flows into the federal government's Climate and Transformation Fund, which has been allocated around eleven billion euros this year. These funds will be used to finance the energy transition, among other things.

Baden-Württemberg calls for social compensation

Ahead of the Transport Ministers' Conference at the beginning of April, Baden-Württemberg's Transport Minister Winfried Hermann (Greens) called for relief for citizens in view of the higher energy prices expected from 2027. "These burdens must be cushioned in a socially just manner," he emphasized.

The federal government could submit a social climate plan to the EU and secure up to 5.3 billion euros in funding for social compensation measures. If the federal government misses the deadline, it is unclear whether Germany will be able to receive the funds at all. Baden-Württemberg therefore submitted a corresponding motion to the Conference of Transport Ministers. The federal states should now jointly call on the federal government to act.

Study: Without climate money, acceptance drops

According to a study by the German Institute for Economic Research (DIW), it is not enough to simply announce the climate money. Author Lars Felder calls for swift and concrete action. This is the only way to ensure acceptance of rising CO₂ prices among the population.

The CO₂ price was introduced in 2021 at 25 euros per tonne and has been increased annually since then. In 2022 and 2023 it was 30 euros, in 2024 it was raised to 45 euros. Since the beginning of 2025, it has been 55 euros. A price corridor of 55 to 65 euros is planned for 2026.

According to DIW, many citizens accept higher CO₂ prices if the majority of the revenue is returned directly to them: With a repayment of 80 percent, 50 percent of those surveyed would go along with a CO₂ price of 45 euros per tonne; at 200 euros, it would still be four out of ten people. However, 44 percent reject CO₂ pricing in principle - primarily due to the financial burden or lack of trust in the climate impact.

Climate money: Implementation still uncertain

Source: Haufe, 02.04.2025

In March 2024, the Federal Council called on the Federal Government to create the technical and legal basis for the payment of the climate money in the current year - as a direct payment by the federal government. This was the only way that a payment could be made from 2025.

In a response to a question from the Left Party in November 2024, however, the Federal Government stated that concrete decisions on the payment of the climate money would not be made until the next legislative period.