Energy costs increase: Merz warns of expensive heating and driving!

Energy costs increase: Merz warns of expensive heating and driving!

In a current discussion round, Neo-Chancellor Friedrich Merz announced that the energy costs in Germany are expected to increase significantly. He referred to the progressive CO2 prize and the extended European emissions trade, which is due to come into force from 2027. Heating and gasoline costs will be particularly affected by the rising prices. Merz said: "Heating and driving should become more expensive," and emphasized that the CO2 prize is regulated by the European Union. In this way, incentives for economical heating and the use of CO2-neutral vehicles are to be created, while at the same time pointing out the priority of reducing electricity prices for companies and consumers, which is only tackled after the increase in the CO2 prize. These measures are to be financed by the climate and transformation fund, which shows that the government faces considerable challenges in internal and social policy.

Merz also announced that the coalition agreement stipulated to abolish the heating law. This could be a reaction to the current resistance to rising prices and their possible social injustice. When asked whether the increasing prices should serve to educate people, Merz replied directly with "yes".

Influence of European emission trade

The price development on the European market for emission certificates plays a crucial role in the debate. According to a report by EY, there was an introduction of national CO2 markets in the United Kingdom and China in 2021, which led to an increase in the EU CO2 price from over 30 euros per ton to around 90 euros in December 2021. By 2022, high CO2 prices continued, influenced by various factors such as high raw material prices, regulatory reforms and the Ukraine conflict. This increase in prices was also reinforced by the increasing demand for certificates as a result of an increase in energy consumption in Europe in 2022

Analysts expect lower prices on the short -term market due to an increased offer, while prices should remain stable in the long term, as long as there are no fundamental political changes. Developments with regard to the EU emission trade system aim to gradually reduce the range of emission certificates in order to promote increased CO2 reduction. Politicians, on the other hand, are required to focus on increased exposure to low-income households and companies, as these are particularly affected by the CO2 prize.

challenges and resistance

The introduction of a CO2 tax brings numerous challenges. Households in particular could be heavily burdened because they spend a larger proportion of their income for fossil fuels. Without social compensation mechanisms, this tax could further increase social injustices. In addition, competitive disadvantages for companies in areas with high production costs could occur, which could favor the emigration of industries. These problems are reinforced by the risk of inefficient use of the income generated by the CO2 tax.

The need to make additional investments in renewable energies and energy efficiency remains a central aspect of the discussion. Economic resistances and protest movements in recent years, such as the "yellow vests" protests in France, illustrate the challenges that the government is facing with the implementation of these measures. The likelihood of social tensions increases, especially in rural regions, where the population is more dependent on cars and fossil heating systems. Here it will be crucial to create specific relief in order to reduce inequalities and to gain acceptance for the necessary measures.

The future of energy prices and the CO2 prize thus remains a complex topic that includes both economic and social dimensions. The course of the course could bring profound changes in the German energy sector and beyond.

For further information on the developments related to CO2 emissions trade and its effects on the markets, we refer to the Discussion contribution by industrial magazine .