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March 15, 2023

New Cost Allocation for CO2 Price: Transitional Phase for Commercial Buildings

By

Magdalena Sturm

What Are CO2 Costs?

They are part of the German government's Climate Protection Program 2030 and are intended to pave the way for minimizing greenhouse gases and achieving climate targets. The Fuel Emissions Trading Act (BEHG) regulates the price for combustion-related CO2 emissions.

The CO2 climate charge should actually have been increased from 30 to 35 euros per ton of carbon dioxide emitted in 2023. However, due to the ongoing energy crisis , this measure was postponed until 2024.

In building operation, for example, CO2 pricing has resulted in rising costs in heating. The Carbon Dioxide Cost Sharing Act is intended to provide a further incentive from January 2023 to increase efficiency in building operation while continuing to save energy costs in end consumption.

Buildings: Causer or Solution to the Problem?

The potential for savings in the building sector is enormous: In Germany, the operation of buildings accounts for around 35 percent of energy consumption and 30 percent of CO2 emissions. This only includes direct emissions, i.e. not those additionally caused by the use of electricity and district heating. Moreover, in addition to private households, the calculation only includes the commercial, trade and service sectors, i.e. not industrial operations. Translated with www.DeepL.com/Translator (free version)

The Global Status Report for Buildings and Construction published by the UN Environment Programme makes the need to catch up in building operations even clearer: globally, CO2 emissions from buildings reached a new high of ten gigatons in 2021.

Sustainable construction and the optimization of building efficiency are key steps on the way to achieving climate targets. The CO2KostAufG is intended to encourage landlords to invest in the refurbishment of their buildings and to raise tenants' awareness of energy cost savings.

How Will CO2 Costs be Split in the Future?

The CO2KostAufG is intended to enable a fair distribution of carbon dioxide costs. Until now, tenants in residential buildings have borne the CO2 costs alone. In the future, this will only be the case for particularly energy-efficient buildings. The poorer the energy quality of a building, the greater the share that landlords will have to contribute. The distribution of the amounts will be determined in a 10-stage model. Exceptions include buildings that cannot be fully refurbished due to historic preservation.
 

Does the Tiered Model Apply to Commercial Buildings?

No, for non-residential buildings, a flat-rate solution applies for the time being. Here, the carbon dioxide costs are shared equally. Landlords and tenants can, if both parties consent, agree on a compensation, for example via the rental costs.

However, according to the law, the 50:50 cost sharing is only a temporary solution. There will also be a comparable tiered model in non-residential buildings. In order to implement this tiered model, however, a meaningful data basis is currently still lacking. Corresponding data on the size, type of use and consumption of non-residential buildings will be collected by 2024 in order to finalize the model in 2025.

There are also exceptions in the regulation for non-residential buildings: For buildings in which only part of the area is used for commercial purposes, the 10-step model for residential buildings applies.

Buildings Simply Made Better

No matter what the phased model for commercial buildings in 2025 turns out to be, there is potential to save up to 40 percent CO2 emissions in many existing buildings. This potential can be uncovered by analyzing the building's operation. The aedifion cloud platform helps with the analysis. Through the intelligent building analysis, building managers and owners receive a whole range of recommendations for action on how their buildings can be efficiently automated thanks to artificial intelligence.