CO2 Tax in Germany: How the CO2 Price Works and Who Pays for Heating

The CO2-Steuer in Germany is more commonly referred to as the “CO2 tax,” although legally it refers to the price of emissions in the national emissions trading system for fuel. It affects the cost of natural gas, heating oil, gasoline, diesel, and certain other energy sources. For tenants, two questions are most important: how much of the CO2 charge is included in the heating bill, and what portion must the landlord cover?

In 2026, the fixed price ended: certificates for the national system are sold at auction within a range of 55 to 65 euros per metric ton of CO2. Therefore, the final cost depends not only on the law but also on actual fuel consumption, the type of heating system, the size of the dwelling, and the building’s energy efficiency.

What Is the CO2 Tax in Practice?

The German CO2 price is implemented through a national emissions trading system for fuels used primarily in heating and transportation. Suppliers and companies that bring fuels to market purchase emissions allowances. These costs are typically included in the price of natural gas, heating oil, gasoline, or diesel and are then passed on to the end consumer.

The Deutsche Emissionshandelsstelle (DEHSt) at the Umweltbundesamt is responsible for administering the system. For consumers, this does not appear as a separate tax return but rather as part of the price on their energy, heating, or fuel bill at the gas station.

It is important to distinguish between:

• The CO2 price for fuel under the national system;
• standard taxes and fees on energy resources;
• VAT, which also affects the final amount on the bill;
• Allocation of CO2 costs between the tenant and the landlord under the CO2 Cost Allocation Act (CO2Kostenaufteilungsgesetz).

CO2 Price by Year

Until the end of 2025, certificates were sold at a fixed price. Starting in 2026, the auction phase begins with a set price range.

Year	Price per metric ton of CO2 in the national system
2024	45 euros
2025	55 euros
2026	auction range of 55–65 euros

The final price in 2026 will depend on the results of the auctions. Therefore, predictions along the lines of “exactly how much a liter of gasoline will cost due to CO2” should be considered estimates rather than guaranteed rates.

Which types of fuel are affected by the CO2 price?

CO2 costs arise from the use of fossil fuels and certain types of fuel with non-zero emissions. In practice, these most often include:

• natural gas;
• fuel oil and heating oil;
• liquefied gas;
• gasoline;
• diesel;
• coal;
• District heating, if the heat is generated from fossil fuels;
• the portion of biofuel, if it is not considered climate-neutral under applicable regulations.

This may also include fuel for transportation. Therefore, drivers automatically pay the CO2 component when they purchase gasoline or diesel. A separate payment to the Finanzamt is not required for this.

Some heating and transportation options generate almost no such burden: heat pumps, solar thermal energy, wood pellet heating, electric vehicles, or hydrogen-powered vehicles. However, the final savings depend on the specific system, electricity prices, the condition of the building, and available subsidies.

How CO2 Costs Are Included in the Heating Bill

For gas or oil heating, CO2 emissions are included in the bill from the fuel or heat supplier. If the property is rented and heating is billed through Nebenkosten, the tenant usually pays an advance payment along with the rent and then receives an annual adjustment.

The heating bill must include information that makes it possible to understand the CO2 costs: fuel type, consumption, emissions, and the calculated amount. If the building has central heating, the landlord or management company usually handles the allocation when preparing the Heizkostenabrechnung.

The higher the energy consumption and the poorer the home’s insulation, the higher the CO2 burden. Therefore, an older building with gas or oil heating may result in a significantly higher bill than a well-insulated home with modern heating.

How CO2 Costs Are Split Between the Tenant and the Landlord

The CO2 Cost Allocation Act (CO2Kostenaufteilungsgesetz) has been in effect since January 1, 2023. For residential properties, the law allocates CO2 costs between the tenant and the landlord according to a ten-tier model. The higher the emissions per square meter per year, the larger the share paid by the landlord.

CO2 per square meter per year	Tenant’s share	Landlord’s share
less than 12 kg	100%	0%
12 to less than 17 kg	90%	10%
17 to less than 22 kg	80%	20%
22 to less than 27 kg	70%	30%
27 to less than 32 kg	60%	40%
32 to less than 37 kg	50%	50%
37 to less than 42 kg	40%	60%
42 to less than 47 kg	30%	70%
47 to less than 52 kg	20%	80%
52 kg and above	5%	95%

The idea is simple: if a building emits a lot of CO2 due to poor energy efficiency, the landlord bears most of the costs. If the building is energy-efficient, the tenant pays a larger share because the costs depend more on their own consumption.

There are exceptions and special cases, such as restrictions due to historic preservation, public law requirements, or specific heating system characteristics. Therefore, it is best to verify disputed bills using the official BMWK calculator or by consulting the Mieterverein.

What to do if the landlord has not specified their share

If the landlord provides heating, they must include in the heating bill (Heizkostenabrechnung) a breakdown of CO2 costs, specifying the tenant’s share and the landlord’s share. If the allocation is not done correctly, the law grants the tenant the right to reduce heating-related expenses by 3%.

If the tenant has entered into a contract directly with a gas, fuel oil, or heat supplier, they first pay the bill to the supplier. Afterward, they may request reimbursement from the landlord for their share of the CO2 costs. To make such a claim, they need the invoice, consumption data, and a calculation based on the CO2Kostenaufteilungsgesetz model.

The practical procedure is as follows:

1. Locate the fuel type, consumption, and specified CO2 costs on the bill.
2. Check the floor area of the heated dwelling.
3. Calculate CO2 emissions per square meter per year.
4. Determine the tier in the allocation table.
5. Compare the calculation with the Heizkostenabrechnung or send a claim for reimbursement to the landlord.

How to Calculate the Share of CO2 Costs

To check this yourself, you need heating-specific data rather than the total amount of Nebenkosten. The easiest way is to use the official BMWK calculator for CO2 cost allocation. It prompts you step-by-step to enter data from your bill and shows what share each party is responsible for.

If you do the math manually, the logic is as follows:

1. Determine the annual energy consumption for an apartment or house.
2. Allocate consumption based on heated floor area.
3. Multiply the result by the emissions factor for the corresponding fuel.
4. Find the resulting figure in the distribution table.

Example: An apartment consumed 12,000 kWh of natural gas per year and has a floor area of 70 m². Energy consumption works out to about 171 kWh/m². Using a conversion factor of 0.20088 kg CO₂/kWh for natural gas, the result is approximately 34.35 kg CO₂/m² per year. Such an apartment falls into the category where the tenant and landlord split CO2 costs 50-50.

Fuel conversion factors must be specified on the supplier’s bill or in the heating statement. Do not use random values found online if the specific bill already contains official calculation data.

CO2 Price and Automotive Fuel

For motorists, the CO2 price is included in the price of gasoline and diesel. The higher the price of a certificate, the higher the CO2 component per liter of fuel. However, the final price at the gas station also depends on global oil prices, taxes, margins, regional competition, and the time of purchase.

Therefore, tables with precise forecasts up to 2030 are best viewed as model calculations. For everyday budgeting, it is more useful to follow a general principle: cars with high fuel consumption are more heavily impacted by rising CO2 prices, while fuel-efficient cars, public transportation, and bicycles reduce dependence on such costs.

Related topics: fuel costs in Germany, public transportation and bicycles.

How to Reduce Costs Associated with the CO2 Price

Consumers cannot lower the CO2 price itself, but they can reduce fuel consumption or switch to a heat source with lower emissions. The most practical options are:

• Check the heating settings and room temperatures;
• Eliminate drafts and heat loss;
• Ask the landlord for information about the building’s energy efficiency;
• When purchasing real estate, assess the condition of the heating system and the Energieausweis;
• Replace old gas or oil heating systems, if technically and financially feasible;
• Use KfW, BAFA, or regional subsidy programs only after verifying the current eligibility requirements;
• For a car, consider fuel consumption, not just the purchase price.

For property owners, energy-efficient renovations can reduce not only CO2 costs but also the risk of disputes with tenants over heating bills. For tenants, the key is to carefully review the annual bill and make sure not to overlook the line item for CO2 costs.

In Brief

The “CO2 tax” in Germany is the colloquial term for the CO2 price on fuel. In 2026, allowances are no longer sold at a fixed price but are auctioned within a range of 55–65 euros per metric ton. For heating, CO2 costs are split between the tenant and the landlord under the CO2 Cost Allocation Act (CO2Kostenaufteilungsgesetz): the worse a building’s emissions performance, the more the landlord pays. To verify the bill, you’ll need data from the heating cost statement (Heizkostenabrechnung) and, if necessary, the official BMWK calculator.