FRIDAY, March 29, 2024
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Germans agree CO2 taxes aren't high enough and want to pay more

Germans agree CO2 taxes aren't high enough and want to pay more

Germans say they're ready pay a higher national levy on carbon pollution after utilities and policy makers joined climate activists in rebelling against proposed below-market rates deemed insufficient to fight climate change.

Lawmakers from Germany's 16 states reached preliminary agreement over the weekend to more than double a new tax on carbon dioxide emissions from transport and heating, according to a document seen by Bloomberg News. Consumers in Europe's biggest economy will now face a 25 euros ($27.85) a ton surcharge rather than the 10 euros a ton initially proposed. The pollution premium will rise to 55 euros by 2025, a jump of almost three-fifths from the original proposal.

Policy makers joined the BDEW utilities lobby and World Wildlife Fund in demanding the cost of polluting be set closer to market prices, where carbon permits under the European Union's emissions-trading system currently trade at about 24 euros a ton. Chancellor Angela Merkel's government had initially shied away from introducing the higher fee because of the risk of a political backlash from consumers facing higher gas and heating costs.

Two of Germany's most powerful lobbies -- the BDI industry group and the BDEW utilities federation -- said Monday they were against the plan to raise emissions costs. The move would "drastically damage the competitiveness of the economy," BDI said in a statement.

The so-called upstream charges for pollution certificates will be paid by sellers of oil and gas, who can pass the extra costs on to customers. Merkel said the levy was the "centerpiece" of her government's move to get Germany back on track to cut emissions. Pollution from transport and heating accounts for about a third of all German emissions and have barely declined this decade.

The government will use additional revenue from the updated charges to cut the cost of retail power that has swelled because of clean-energy surcharges, according to the document. Germany will also cut the value-added tax on rail travel from 2020 and increase tax rebates for commuters living long distances from their workplace.

The Finance Ministry originally calculated revenue of 3.6 billion euros in 2021, a figure that could more than double under the new price.

The higher levies, instituted to speed the adoption of more efficient and ecological transport and heating technologies, could still carry political risks. The "Yellow Vest" protests in France were ignited by increased taxes. The rising popularity of the Alternative for Germany party, which opposed the charges, influenced Berlin's initial cautious approach.

Germany's subsidized Energiewende, or energy transition, that kicked off two decades ago marked one of the biggest shifts in wealth since World War II, Brandenburg's state governor Dietmar Woidke has said. Homeowners who invested in solar and wind energy received state support while many of the millions of Germans renting homes see themselves left out.

Revenue from sales of emissions permits from both Europe's ETS platform and from the national CO2 permit program is expected to finance as much as two-thirds of Germany's sweeping 54 billion-euro Climate Protection Program 2030 unveiled in September.

 

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