This is what Germany's new climate package means for you
As thousands of protestors took to the streets to demand action on climate change on Friday, Germany’s ruling coalition finally reached an agreement on a way forward for climate protection. After a mammoth 18 hours of deliberations, some details were finally revealed about their long-awaited “climate package” (Klimapaket). Here’s an overview of the key points.
“Black zero” budget will stay
Overall, the CDU / CSU / SPD coalition (dubbed the “Climate Coalition” in the media) pledged some 50 billion euros towards fighting climate change over the next four years.
Despite some speculation that the amount set aside might run into the hundreds of billions, the 22-page document makes clear that the government intends to stick firmly to its “black zero”, balanced budget sheet. It will therefore not take on any new debt for the climate package.
CO2 price pushes up petrol costs
The coalition leaders have agreed on a price for climate-damaging CO2 emissions, applicable to both vehicles and buildings. The CO2 price will come into force in 2021, at a low level to start with but increasing over the years: the cost per tonne of carbon dioxide will gradually increase from 10 to 35 euros between 2021 and 2025.
The price of petrol and diesel will therefore increase by around 3 cents per litre in 2021, then continue to rise by a further nine to 15 cents a litre by 2026.
Vehicle tax linked to emissions
In the future, motor vehicle tax in Germany will be more closely linked to CO2 emissions. As of January 1, 2021, CO2 emissions per kilometre will primarily determine the amount of tax due for all newly-registered cars. In addition, the tax will be increased in "two emission levels" for vehicles that produce more than 95 grams of CO2 per kilometre. That means that vehicles with particularly high emission levels, such as SUVs, will have to pay substantially more.
Increase in commuter rate
To compensate for the CO2 price, the commuter allowance for driving will be increased by five cents per kilometre from 2021. In the future, therefore, 35 rather than 30 cents per kilometre will be tax-deductible in commuters’ annual tax returns.
Boost for electric cars
The federal government wants between seven and ten million E-cars to be registered in Germany by 2030. To boost sales, therefore, prospective electric car owners can receive a subsidy for purchasing vehicles that cost less than 40.000 euros. Additionally, taxation on electric cars as "benefits in kind" will be reduced and a million public charging points are to be created.
Lower rail prices
As expected, the grand coalition has confirmed their intention to cut VAT on tickets for long-distance trains, from 19 to seven percent. German rail companies such as Deutsche Bahn have promised that this saving will be passed on to customers.
More charging stations for electric vehicles
To promote the switchover to electric vehicles, the government intends to install significantly more charging stations - one million of them by 2030. By this time, there should be between seven and 10 million electric vehicles in the federal republic.
More expensive flights
To encourage people to opt for more climate-friendly means of transport, the price of flying is also going to increase. Aviation tax will therefore go up from January 1, 2020.
Electricity price relief
The package of measures also provides relief for the high cost of electricity in Germany. In return for the CO2 price on traffic and buildings, the EEG levy - an additional tax placed on energy in Germany to promote the development of renewable energy - will be lowered from 2021.
More housing benefit
People who receive housing benefit in Germany can also look forward to more relief in the future - their allowance will, according to the paper, be raised by 10 percent.
Ban on oil heaters
The package also envisages prohibiting the installation of new oil heaters as early as 2026. Anyone who choose to replace their old oil heater with a more climate-friendly model will also be supported - with the government reportedly offering to foot up to 40 percent of the bill. Energy supply renovations and the construction of energy-efficient buildings will also be promoted by the government.