New Costs For Landlords Due To Carbon Dioxide Cost Allocation Act

The Carbon Dioxide Cost Allocation Act (Kohlendioxidkostenaufteilungsgesetz) introduces mandatory sharing of carbon dioxide costs between landlords and tenants. For landlords, this generally means an increase in costs as of January 1, 2023.

The Lower House of the German Parliament (Deutscher Bundestag) passed the Act on the Allocation of Carbon Dioxide Costs (Carbon Dioxide Cost Allocation Act - CO2KostAufG on August 24, 2022, printed matter (Bundesdrucksache) 20/3172) on November 10, 2022 (the "Act"). This alert aims to highlight the potential practical consequences of this legislation.

The Act provides a new allocation of the cost of carbon dioxide prices between landlords and tenants. On the landlord side, the Act is intended to incentivize energy-efficient renovations, and on the tenant side, to encourage energy-efficient behavior.