In the medium term the German government will reduce electricity prices as a counterweight to the new CO2 pricing. The principle is simple: if revenues from CO2 pricing rise, electricity prices will be reduced further.
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As of 2021 commuters will be able to offset a higher sum if they live further away from their place of work. As of a distance of 21 kilometres, they can offset 35 cents per kilometre. This rule will expire at the end of 2026. The people who have the highest additional costs because they travel longer distances will thus benefit more from financial relief.
Housing benefit to rise, costs of rail travel to fall
People living in rented accommodation or receiving housing benefit are also to be protected from rising energy prices. To cushion rising energy prices the German government is to raise housing benefit by 10 per cent.
Costs of public transport too are to be cut. VAT on the tickets bought by rail travellers will in future be charged at a rate of 7 per cent rather than 19 per cent.