The planned climate bonus (‘Klimageld’) payment to return state revenues from carbon pricing to citizens as compensation for rising CO2 prices has been described as an “excellent idea” in an article on ‘Zeit Online’ by Fatih Birol, head of the International Energy Agency. High costs linked to the energy transition and decarbonisation for low and middle income households should be compensated through targeted financial support in order to secure acceptance of climate policies, Mr Birol said. “If we don’t do this, the burden on people with low and medium incomes could create fertile ground for extreme political views, which in my view is a danger to our democracies,” he warned.

Mr Birol  said that he was aware of continuing discussions about the climate bonus in Germany’s government, expressing hope that these could be overcome quickly. Finance minister Christian Lindner recently announced that the governing coalition would not follow through with its original plan in the current legislative period, arguing that introducing the climate bonus would not be technically feasible before 2025.

Without providing a timeline or further details, the German government had agreed on the per capita climate bonus in its coalition treaty as a social compensation mechanism to increase acceptance of carbon pricing. A key remaining question is how to ensure the money reaches all citizens, with the three coalition parties divided over the details. While the Free Democrats (FDP)) favour a lump sum per capita payment, the Social Democrats (SDP) have called for more targeted relief depending on income and wealth.