Berlin caps the CO₂ price and still makes heating more expensive in 2027

This week, politics appeared to ease the cost of heating while in fact making it more expensive. The Bundestag capped the CO₂ price for 2027, which is being sold as protection for tenants. In the same days the economics ministry presented the key points of a green gas quota, and the first grid charges for 2027 point upwards for gas. My thesis: the capped CO₂ price is not relief but the quietest year before the rise — and while Berlin turns three cost screws at once, not a single one of these decisions answers who finances the alternative. Now is the moment to say so, because owners and landlords are calculating their 2027 heating costs right now, and the three decisions look harmless one by one but pull in the same direction together.

Three decisions, one direction

Decision one: on 16 October the Bundestag passed the amendment to the Fuel Emissions Trading Act (BEHG). The CO₂ price on heating oil and natural gas stays within the corridor of €55 to €65 per tonne in 2027, as in 2026. It became necessary because the European emissions trading scheme for buildings and transport was postponed to 2028. Without the amendment the price would have tracked the fluctuating EU-ETS-1 average; the property association GdW expected €75 to €85 per tonne on that basis. The details are in our report on the BEHG amendment.

Decision two: on 14 October the economics ministry presented the key points of a green gas and green heating oil quota. From 2028, sellers of natural gas and heating oil must blend in a growing green share — one per cent in 2028, five per cent in 2030, up to 100 per cent in 2045 — and only for fuel supplied to private households. The surcharge passes through the fuel price into the heating cost statement, as our report on the green gas quota describes.

Decision three: on 8 October the data provider ene't evaluated the first preliminary grid charges for 2027. For gas, a household using 20,000 kilowatt hours pays an average of €603.47 for the grid, 1.2 per cent more than in 2026, with commercial cases at plus 1.3 to 1.4 per cent. Electricity falls slightly in low voltage but rises by 3.5 per cent in medium voltage. The figures are in our report on the grid charges.

Above all this sits a fourth number. On 12 October the KfW calculated that Germany must invest €290 billion a year up to 2045 to become climate neutral, of which around €64 billion is for buildings alone. The package is borne overwhelmingly by the private sector: €257 billion a year falls to private actors, only €33 billion to the public purse, as our report on the KfW study shows. Each of the three cost screws raises the pressure to replace fossil heat. The fourth number says who pays for the replacement: the owner.

The objection: the cap is relief after all

The obvious objection is that I am talking down good news. €65 instead of up to €85 per tonne is a real saving for tenants and landlords with fossil heating, and the fixed corridor takes the peak out of the risk. That is correct, and I take it seriously.

But the relief is borrowed. In 2028 the European emissions trading scheme for buildings arrives, and then the market sets the price, not a national cap. The capped CO₂ price is therefore not the end of the rise but the last quiet year before it. And in exactly that year two more cost screws were set that eat the saving up again: the green gas quota makes gas more expensive gradually through the fuel price, without a single boiler being replaced, and the gas grid charges keep rising. Whoever looks only at the one reassuring number overlooks the other two.

The second objection is more honest: the green gas quota is only a key-points paper, not a law, and the BDEW sees considerable need for discussion on the ramp-up. True. The percentage steps and the compensation payment may still shift before the planned draft bill on 1 December. But the CO₂ cap is enacted law, the grid charges are in the preliminary price sheets, and the KfW figure is published. The direction is not speculation; only the third screw is not yet tightened.

Why waiting is the most expensive option

For owners, landlords and businesses the real danger is not a single number but paralysis. When the CO₂ price, a new quota and the grid charges each follow their own timetable, fossil heat becomes a moving target, and a moving target invites waiting. That is precisely the most expensive decision, because each screw keeps turning on its own and 2027 is the last capped year.

Since 2021 I have seen in heat projects that it is rarely the will that is missing, but the capital at the right moment. The KfW calculation confirms it: when nearly nine out of ten euros have to be raised privately, progress in the existing building stock turns not on the level of the CO₂ price but on whether the owner can finance the alternative. Three decisions in one week raise the pressure to switch, but none of them supplies an answer to how the switch is paid for. I advise a heat contractor myself and have an interest in owners doing the sums rather than waiting — but the gap between cost pressure and financing path is not an invention; it is in the KfW study.

What I call for

From the legislator: think the three screws together. Whoever caps the CO₂ price, plans a green gas quota and lets the grid charges rise must disclose the combined extra burden per heating type, not produce three isolated announcements. And the green gas quota needs, by 1 December, not only percentage steps but a sentence on how the switch it forces is to be financed.

From suppliers and district heating operators: make price-adjustment clauses and price sheets transparent enough for an owner to compare the years. A lowered grid charge component is worthless if the supplier does not pass it on; ene't itself points this out.

From owners and landlords: treat 2027 as a planning year, not a breather. Carry the CO₂ share of the last bill forward at €55 to €65, add the foreseeable quota burden roughly, and look up the grid charges in your own network area. Put the three screws together into one calculation over 15 to 20 years instead of waiting out each one separately. How the cost per kilowatt hour differs between gas, oil, district heating and a heat pump is set out in the guide to heating costs per kilowatt hour, and what the CO₂ price means for the allocation in the guide to the CO₂ price 2027.

The capped CO₂ price reads like relief, but it is the calm before the rise. Heating does not become expensive in 2027 through one number, but through the sum of three decisions pulling in the same direction — and as long as none of them settles the financing of the switch, the owner is left alone with the cost pressure.