Germany set to agree higher CO2 price for transport, heating

Germany’s parliament is poised to more than double the price at which the transport and heating industries are charged to emit carbon dioxide when a new system is introduced in 2021.

The fee will be charged to companies, but like fuel taxes it will end up being consumers who pay.

German news agency dpa reported Monday that a deal was reached after overnight talks to get a package of measures for tackling climate change through both houses of parliament.

While Germany is part of an EUwide carbon market for CO2 emissions from the energy sector and heavy industry, transport and heating are currently not included in that trading system.

Chancellor Angela Merkel’s government had initially agreed on a starting price for CO2 emissions from transport and heating fuels of 10 euros ($11.13) per ton, but the environmentalist Green party, which holds key votes in the upper house of parliament, demanded it be set higher.

Dpa reported that the charge will begin at 25 euros of CO2, a price that economists say would be more effective in getting people to shift from fossil fuels to renewable energy.

“The targeted price path could actually lead to a real reduction of greenhouse gas emissions,” said Ottmar Edenhofer, co-director of the Potsdam Institute for Climate Impact Research. “It is now close to what economic research has found to be economically effective carbon pricing.”

Edenhofer contrasted the national measure with what he described as the “weak outcome” of a recent UN climate meeting and noted that the revenue will be used to cut the cost of electricity, which is relatively high in Germany compared with the rest of Europe. (AP)