CO₂ price: The real cost question begins in 2028

By Dr. Michael Heigl,
Director ESG & Impact Economics at Wüest Partner

The cabinet decision of 12 August 2026 initially gives the real estate industry some breathing space: In 2027, the national CO₂ price in Germany is also to be in a corridor of 55 to 65 euros per tonne. For owners and investors, this means more calculability in the short term in terms of ancillary costs and in the distribution of CO₂ costs between tenants and landlords.

The crucial question, however, is what comes next. From 2028, the building sector is to be transferred to the European emissions trading system ETS 2. Then the CO₂ price will be determined more strongly by the market. So far, there is no permanently guaranteed price cap. This creates a risk, especially for long-term real estate investors, which should already be taken into account in business plans and valuations today.

A look at other European countries shows how high CO₂ prices can generally be. In 2025, they were 134 euros per tonne of CO₂e in Sweden, 126 euros in Switzerland, 124 euros in Norway and 100 euros in Denmark. Assuming that CO₂ pricing in Germany approaches these levels from 2028 onwards, rising CO₂ costs will lead to an additional burden on ancillary costs.

This is relevant for real estate because higher ancillary costs will also affect the scope for net cold rent and rentability in the future. For tenants, the entire monthly burden ultimately counts. The higher heating and CO₂ costs, the more difficult it can be for owners to enforce higher rents on the market. From 2028 onwards, it is therefore likely to become increasingly difficult for both residential and non-residential buildings to rent out energy-inefficient buildings in particular and to generate appropriate rental yields with them.

Even the biostaircase provided for in the Building Modernization Act (GModG), according to which fossil heating systems must use gradually increasing quotas of climate-neutral fuels, will not necessarily solve this problem. Both the ZIA and the DGNB are critical of whether energy suppliers can offer or provide the necessary shares at all. This means that there is a potential risk of corresponding gaps in care.

From an investor's point of view, it is therefore not enough to look at statutory transition periods alone. The decisive factor is how high the total costs of a building will be in the future and how competitive it remains compared to more efficient properties.

It remains crucial for investors to realistically consider CO₂ costs beyond 2027 in business plans and valuations. Those who rely on the current price cap only gain short-term security.

The long-term direction is set by the EU Green Deal and the EPBD: the building stock must become significantly lower in emissions. At the same time, national legislation in Germany is currently counterproductive in some cases, because necessary measures and the associated problems are postponed into the future at short notice.

In addition, the actually required renovation rate of 1.9 percent according to BuVEG has not been achieved in Germany for years and has been below 1.0 percent in the past four years. If necessary investments are postponed further, the risk increases that several burdens will hit owners at the same time later on: higher CO₂ prices, rising operating costs, greater need for renovation and a weaker market position of inefficient buildings.

For investors, the CO₂ price of 55 to 65 euros per tonne should therefore not be the central assumption for long-term decisions. Scenarios that also reflect significantly higher prices from 2028 onwards and adequately take into account their effects on ancillary costs, rents, rentability, investment requirements and property values make more sense.