Economists call for introduction of climate money

Last Updated: 5. Januar 2024By

With the turn of the year, once again new regulations come into effect. For many of us, life will become more expensive. This applies – as in previous years – especially to the energy supply sector.

Price increases in the energy sector foreseeable Whether it’s oil or gas for heating, fuel for the car, or simply the electricity in our own homes: Because of the rising CO2 pricing, all of this will now become noticeably more expensive. The levy was introduced in 2021 and has gradually increased since then, with the turn of the year it will now rise from previously 30 to 45 euros per ton.

However, the CO2 pricing is not designed as an additional tax. Rather, it is intended as a control instrument to motivate companies and private consumers to use energy resources more sparingly. Because those who consume less not only protect the environment but also their own wallets.

Climate money with steering effect – promised, but (not yet) implemented While it is possible to improve one’s own CO2 footprint here and there, consumption cannot be completely avoided. In order to relieve especially low-income households from the rising prices, the federal government promised a climate money already 2 years ago. Depending on income level and household size, amounts should be refunded to consumers. Low-income earners and people with low CO2 consumption were supposed to benefit from this.

The problem: Until today, no one has received such a climate money. It has not yet been implemented by the government. While the CO2 pricing has been a reality since 2021 and continues to rise, the climate money is still nowhere to be seen. The Federation of German Consumer Organisations recently calculated that the federal government has generated additional income of around 11 billion euros through the levy since its introduction – and is calling for a complete payout. This would correspond to a one-time payment of 139 euros per capita.

Leading economist calls on politicians to take action Even the economist Veronika Grimm, who is a member of the so-called economic council – a high-ranking advisory body to the federal government – recently vehemently demanded the introduction of a climate money. In her opinion, it should have been introduced at the beginning of the CO2 pricing, but now it is high time to turn this screw in the face of rising levies and relieve citizens. The combination of CO2 pricing on the one hand and payment of climate money on the other has the potential to achieve exactly the steering effect that is explicitly desired politically.

The government’s response to the growing demands for the introduction of climate money was a reference to funding programs from which citizens have already benefited. The additional income from the levy has flowed into the Climate and Transformation Fund, which has financed, among other things, funding premiums for the modernization of buildings and heating systems or the purchase of electric vehicles.

Funding programs for low-income earners usually ineffective This is correct. However, the problem is that to benefit from these funding programs, a certain amount of equity was already required. However, households with low incomes rarely have their own property or consider buying a new car – which is known to be significantly more expensive with an electric drive than with a vehicle with a conventional combustion engine.

While relief has indeed taken place, the lower income brackets have hardly been reached. For them, the climate money would be a blessing – because they are particularly hard hit by the rising prices. Especially since higher energy prices are likely just the beginning: Because this also makes the production and transport of goods more expensive, which is usually passed on to consumers through higher prices.