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MONEY

What is Germany’s ‘climate money’ plan and why is it delayed?

Germany's governing coalition has been working on plans to redistribute money raised by its CO2 tax to ordinary citizens. Here's why it hasn't happened yet - and what it could mean when it does.

Published: 28 December 2023 17:07 CET
A piggy bank full of euro coins and notes.
A piggy bank full of euro coins and notes. Photo: picture alliance/dpa | Hendrik Schmidt

With the climate crisis intensifying with each passing year, slashing carbon emissions and rethinking our lifestyle habits is one of the major challenges of our time. 

Though most of us know we have to play our part, it often seems like fighting climate change either involves expense, like swapping out our old heating systems, or missing out on pleasurable things like driving, flying to exotic destinations, or cutting down on meat.

That’s partly where the government’s plan to introduce something known as ‘Klimageld’ – or climate money – comes in. What if, instead of feeling deprived, you could feel the benefits of reducing emissions in your bank account each month?

Though it hasn’t come to fruition yet, it could only be a matter of time before eco-friendly citizens start to feel that little bit better off. 

What is ‘Klimageld’?

Klimageld, which translates as climate money, refers to a plan to transfer cash the government has earned from the CO2 tax back to citizens on a monthly or yearly basis.

Currently, the CO2 tax is set at €30 per tonne of carbon emissions, but this is set to rise to €45 per tonne in 2024 and eventually as much as €65 per tonne by 2026 – or possibly even higher. This means that the cost of goods that are more harmful to the planet, such as gas heating or petrol for the car, will see a sharp increase in cost over the coming years.

The thinking behind this is that people will start to consume less of these climate-damaging products as they become less affordable, helping people bring down their individual emissions and make more conscious choices. However, the CO2 tax has been criticised for hitting the poor hardest since everyone will have to bear the same increased costs, regardless of their income. 

READ ALSO: The important money and tax changes in Germany in 2024

To make the system fairer and increase acceptance for climate protection measures within the population, the government plans to redistribute the money raised from the CO2 tax in the form of an allowance or rebate. Though everyone would get the same amount, people who make more eco-friendly choices will ultimately do better out of it as they would be paying less CO2 tax than the average person, while receiving the ‘average’ rebate.

How much would I get in my account?

This will depend on a number of factors, such as how high the CO2 tax happens to be, but thinktank MCC has estimated that people will be entitled to around €130 per year next year.

In 2027, meanwhile, the per-person rate could be as high as €250, meaning a four-person household would receive €1,000. 

woman cooking in the kitchen

A woman cooks on a gas stove in the kitchen. Making more climate friendly choices could benefit you financially under the Klimageld scheme. Photo: picture alliance/dpa | Annette Riedl

In an interview with Tagesschau, the Central Consumer Rights Agency (VBZ) said people in Germany were already owed €139 by the government for the past three years of the CO2 tax. It’s unclear if these back-payments will be made once Klimageld is finally introduced, however. 

READ ALSO: Digitalisation: The German states offering the most online services

Why is it so delayed?

As you might have been able to guess, the long delays to introducing Klimageld are a result of technical issues with the implementation.

According to Finance Minister Christian Lindner (FDP), whose ministry is responsible for finding a way to pay out the climate money, the government needs to find a way to link an individual’s bank details to their tax ID – an issue that has been incredibly difficult to solve. In other words, digitalisation is the problem yet again.

When will we see it come in?

Though Klimageld was mentioned in the SPD, Greens, and FDP’s coalition pact, there was no mention of a date for implementing it, which has allowed the government to kick the can down the road a little.

However, with the cost of living rising and a major hike in the CO2 tax coming in 2024, pressure has been rising for the policy to finally be introduced.

According to Lindner, the goal for the next few years is to iron out the current issues with implementation and develop a structure for the pay-outs.

“The climate money remains on track,” the Finance Minister told RND. “A structure for payment will be created during this legislative period. After that, decisions will be made on the implementation. That – and nothing more – is what we promised as the traffic light. That is what we are sticking to.”

READ ALSO: How Germany plans to solve its budget crisis in 2024

Economics Minister Robert Habeck of the Greens has also previously said that he expects the first payments to happen after the next election.

With all three governing parties plummeting in the polls, the question is whether they will have the strength to finish what they start if a new conservative-led government comes into power. 

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PROPERTY

Why it’s hard to find an apartment with air conditioning in Germany

When temperatures start to get up to 30C or more in Germany, a familiar debate begins. It often starts with a simple question, asked by a new arrival to the country: “Why don’t German homes have air conditioning?”

Published: 25 June 2024 16:58 CEST
Why it's hard to find an apartment with air conditioning in Germany

The tendency to avoid air conditioning (A/C) is not uniquely a German trend. Europeans tend to use A/C less than residents in the US, and some countries in Asia.

But as temperatures have crept slowly upwards due to climate change, and the number of hot days has increased, Europe has seen an increase in demand for air conditioning. Across the continent A/C use has more than doubled since 1990.

But A/C is used much more commonly in countries that see higher temperatures like Spain, Italy or France, whereas it is still uncommon in homes in Germany.

So why does Germany tend to lack air conditioning, and why aren’t more Germans interested in installing it?

It’s not a ‘hot’ country

Ask a German why air conditioning is so rare in the country, and you’ll probably hear some version of “Well Germany is not such a hot country.” Which may be true generally, but is a less than convincing explanation if you hear it on a sunny summer day when it’s 35C outside.

But it is worth keeping in mind that while Germany does have warm summers, often with at least a couple heat waves, super hot days are few compared to warmer countries, like those in southern Europe. 

Given Germany’s weather can really only be described as hot for a few weeks out of each year, and considering the costs of installing and running air conditioning, most Germans figure it’s not worth it.

attic with sliding window

A sliding attic window is designed to help tenants cool off, but it won’t help to open windows during the hottest part of the day. Photo: pa/obs LiDEKO | LiDEKO

This isn’t only reserved for homes, but extends to plenty of public spaces including office and government buildings, and to some public transportation as well. 

In fact, schools and workplaces do occasionally call it quits during hot weather spells in an event called hitzefrei.

READ ALSO: Ditching AC for ‘Hitzefrei’ – Taking on the German summer as a Californian

Air conditioning is energy intensive and expensive

The other side of the argument against air conditioning is that both installation and operating costs can be expensive. Air conditioning tends to be energy inefficient, so using it can significantly increase your utility bill.

From an environmental point of view, all the energy used for air conditioning, if Germany was to start installing A/C at scale, would add to the country’s energy demand and greenhouse gas emissions – both of which Germany is already struggling to cut down year after year as part of its climate goals.

It is an ironic feature of traditional air conditioning that it creates a negative feedback loop: More people rely on air conditioning to stay cool as weather warms, but weather continues warming in part due to emissions from air conditioning.

That said there are cases where access to air conditioning can save lives. In particular elderly people and those with health-risks are prone to heat sensitivity. So while it’s probably good that not every house in Germany has A/C, it’s important that hospitals and some other buildings in a given city do.

READ ALSO: How German cities are adapting to rising temperatures

‘Cold air makes you sick’

Along with the reasonable (if debatable) reasons for the lack of A/C in Germany, there are also cultural factors.

On the social media website Reddit, a user posted the question, “Will more places in Germany start using air conditioning?”

One of the top comments read, “Don’t you know cold air makes you sick….says Oma (the German word for grandma). 

While that comment comes off a bit tongue in cheek, it touches on a real and deeply-ingrained belief that persists among parts of the German population: That exposure to cold, or even maybe a cool breeze, is bad for your health. This includes a draft in your house, called a Durchzug in German.

For this reason, the German Red Cross felt compelled to debunk the Durchzug health myth in a hot weather warning they issued in 2019.

a heat pump is installed

An employee inspects a heat pump in front of a newly built residential building. Heat pumps are also effective for cooling. Photo: picture alliance/dpa | Bernd Weißbrod

What can you do about the heat?

Regardless of where you stand on the air conditioning debate, if you don’t have a personal A/C unit at home presently, the best way to endure the hottest days of summer may be to take a few tips from the locals.

During my first summer in Germany, I took to leaving the windows open throughout the day, thinking that the occasional warm breeze was the best relief I could hope for at home. But one day my landlord came by and asked me why I was suffering in the heat with the windows open.

He recommended that I instead leave the windows open at night or in the early morning to get some fresh cool air inside, and then keep all the windows closed through the heat of the day. I tried this strategy the next day, and immediately felt that he was right.

Compared to homes in the US, for instance, German homes tend to be very well insulated. This can be equally important in the summer as it means that the interior tends to stay cooler than the outside (as long as you keep it mostly sealed off).

On extremely hot days, you might even keep your shutters down to shade the windows and prevent the sun from shining through.

Of course the effectiveness of the strategy depends on having a home that’s well insulated, including double paned windows and well-sealed doors etc. If you feel that the inside of your house is getting as warm or warmer than the outside, then it’s probably time to open up the windows or go outside and sit in the shade.

Fans are also useful. Best is a ceiling fan designed to rotate counter-clockwise to push air downward, which can maximise wind chill within a home, but floor fans can also help.

Ironically, in the longer term it may actually be heat pumps that help Germany to modernise its cooling infrastructure. 

Heat pumps maximise the efficiency of heating systems by moving warm air around a building, and they can also work with cooling systems. Many heat pump systems on the market today are already built to support both heating and cooling functions, and they are much more energy efficient than classic air condition systems.

READ ALSO: Who can apply for Germany’s new heat pump grants for homes?

Unfortunately for tenants with no heat pump and no A/C, the best you can do for now is take notes of cool places in your city where you can relax in the shade or in the water during the hottest hours or the hottest days.

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