Breakthrough on the German climate package

Yesterday, the German states and the federal government reached agreement on the core elements of the grand coalition’s Climate Package, a set of new laws for environmental protection.

The agreement sets the price of CO₂ at €25 per tonne as of 1 January 2021. The grand coalition partners, the Christian Democrats (CDU), Christian Social Union (CSU), and the Social Democrats (SPD), increased the price from the original proposal of €10 per tonne to accommodate the Greens, who had refused to vote for other parts of the package if the CO₂ remained that low. This price will increase to €30 by 2022 and €55 by 2025.

The extra revenue from the higher carbon price will be used to reduce the surcharge for energy use to help refinance renewal energy, thereby giving money directly back to consumers. The agreement also paves the way for cheaper train tickets as of 1 January 2020 by decreasing the value-added tax for railway firms.

With the compromise on carbon pricing, the Greens have now agreed to support increases to the commuter allowance, which environmental advocates have noted disproportionately benefits those that commute by car. The new plan also provides German states with €1.5 billion from 2021-2024 to compensate for foreseeable tax shortfalls.

This breakthrough in negotiations means that the legislation is very likely to pass. On Wednesday (18 December), the arbitration committee is set to approve the whole package. The final votes in the Bundestag and Bundesrat are set to come at the end of the week.

(Sarah Lawton | 

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