No money for climate money?

16.01.2024


Source: Energy & Management Powernews

Economists and consumer advocates are calling for the climate money to be paid out to citizens as soon as possible. The federal government is in no hurry.

The electricity price brake, heating law, heat planning law - the federal government has pressed ahead with many projects. However, implementing the "social compensation mechanism" to offset higher CO2 prices, as stated in the coalition agreement, will still take a lot of time - and a new government. The climate money, as it is commonly known, is to be introduced "by 2027 at the latest", according to the coalition's plans. A government spokesperson has now let this slip.

Christian Lindner had previously rejected calls for the climate money to be paid out soon. The Federal Finance Minister from the Liberal Party told the Neue Osnabrücker Zeitung that it would take until 2025 to create the technical conditions for this. On top of that, Lindner apparently did not know where he would get the money for the compensation payments from.

After the Bundestag elections

The government's idea is to pay back the revenue from the CO2 price to citizens on a per capita basis. "At the moment, however, the revenue is being used to promote heating, building renovation, green steel production, charging stations for electric cars and so on," explained Lindner. Because "you can't spend money twice", the finance minister told the NOZ newspaper, the climate money would eliminate the subsidies. However, according to the FDP politician, such a "system change" will only be considered after the next federal election.

The government spokesperson cited changes in European emissions trading, which will take effect from 2027, as the reason for the new time horizon. The prices for CO2 emissions from buildings and transport are to be set there in future. And upper limits are to apply to the CO2 certificates that can be traded. The Federal Ministry of Economics is expecting a significant increase in the price of CO2 and correspondingly higher prices for fossil fuels and energy from 2026 or 2027, as the German Press Agency has learned.

DIW: Lindner's statements are "false and contradictory"

The German Institute for Economic Research (DIW) does not share Lindner's view. "The Federal Minister of Finance's argument that the CO2 revenues, which should be returned to the people as climate money, would be used for other support programs is wrong and contradictory," says DIW President Marcel Fratzscher.

"The Federal Government is spending a lot of money on promoting energy-intensive industry and has also relieved the burden on top earners." An important aim of the climate money is to relieve the financial burden on people with medium and low incomes in particular. "The measures mentioned by the Federal Minister of Finance do the opposite," said Fratzscher. He considers the swift implementation of the climate money to be important in order to strengthen social acceptance for the transformation in Germany and to create more trust in the actions of the federal government.

BEE for relief for low-income earners

The German Renewable Energy Federation (BEE) also criticized Lindner. "The Federal Government should not give the impression that it is taking more decisive action on burdens than on relief," says BEE President Simone Peter. "The increase in the carbon price from 30 to 45 euros, which is necessary for climate protection reasons, should be accompanied by financial compensation to mitigate price increases, especially for people on low incomes."

The Munich Environmental Institute cannot understand why Lindner alone is estimating another two years until the payment mechanism alone is in place. The organization refers to the practice in neighbouring Austria. There, "the so-called climate bonus was already introduced a good six months after the introduction of carbon pricing", says Leonard Burtscher, consultant for energy and climate policy at the Environmental Institute.

In December, the Federation of German Consumer Organizations calculated that citizens could receive a one-off climate money payment of 139 euros per capita. The consumer advocates put the federal government's revenue from CO2 pricing at 11.4 billion euros. "Around three quarters of the payments for the carbon pricing introduced in 2021 were made by private households," said the association.

Revenues from the European and national emissions trading systems reached a new high last year. According to the German Emissions Trading Authority of the Federal Environment Agency, they amounted to more than 18 billion euros - an increase of 40 percent compared to 2022. This money flows entirely into the Climate and Transformation Fund (KTF).

Author: Manfred Fischer