From 2028, a uniform EU-wide CO2 price will apply to the building sector in Europe. This would affect the heating costs of over 100 million households. However, the CO2 price will have different effects in the individual countries of the European Union, as a new study shows. Accordingly, most households will only incur higher heating costs to a limited extent, including those in Germany. In some places heating costs are even likely to fall, but in other places they are likely to rise dramatically. Who would have to pay the most?
The European Union’s long-term goal is to reduce greenhouse gas emissions in order to counteract climate change. The building sector plays a special role in this. “Across the EU, around 55 percent of households continue to rely on gas, oil or coal for heating,” says a report from the Bertelsmann Foundation. Residential buildings are therefore responsible for around a third of EU-wide CO2 emissions. In order to effectively reduce this, buildings urgently need to be renovated to make them more energy efficient and heating systems modernized. In order to incentivize homeowners to take these measures, it should become more expensive to produce emissions. This is regulated via the so-called CO2 price in the European Emissions Trading System. This price should have the same value for buildings across the EU for the first time from 2028.
But will this have the same impact on heating costs and thus the incentive to renovate in all affected countries? A study by the Bertelsmann Foundation has now investigated this. The authors expected a starting price of around 60 euros per tonne of CO2 for fossil fuel heating. They analyzed the financial impact on around 188 million households in the EU population depending on their living situation and income.
Where heating is cheaper and where it is more expensive
The result: The planned uniform price for these CO2 emissions will have very different effects on households in different European regions. In countries where such a CO2 price already exists, heating costs are expected to increase only slightly, on average by 17 euros per year per household. This includes most countries in Western and Northern Europe, including Germany. “For most European households, the introduction of the CO2 price in the building sector is easy to cope with,” states Thomas Schwab from the Bertelsmann Foundation.
In some countries the CO2 price is already above 60 euros per ton of CO2. The price there would initially fall from 2028 and heating would even become cheaper. This applies to Portugal, Ireland, Denmark and Sweden. However, the price is likely to rise in countries in Eastern and Southern Europe, including Poland, Slovakia, Croatia and Hungary, where there is still no CO2 price. On average, annual heating costs will add between 100 and 400 euros per household.
“On average, annual heating costs in Europe will increase by around 60 euros per household,” say the experts. The study concludes that people in those countries that have already invested a lot in the climate-friendly conversion of heat supply will tend to be relieved in the future. However, households in countries where emissions reductions in the building sector have not yet made much progress would be more heavily burdened.
Targeted support for needy households
The problem with this predicted future scenario is that in countries where heating is becoming more expensive, most households also have low incomes. These people will be particularly hard hit by the price increases because for them the cost item “heating” is more important in their overall expenditure. According to the analysis, this mainly affects women and people of retirement age and particularly often households in Slovakia, Hungary, Romania and Poland.
In order to ensure that these households, which are heavily affected by the CO2 price and the resulting additional costs, are not overburdened, the study leaders believe that compensation is needed. However, corresponding measures would have to be designed effectively. “With the EU’s revenue from the CO2 price, there is enough money to provide this support – if the member states spend the money accurately,” says Schwab. National climate social plans that show how the countries want to use the money received from the EU should help.
In addition to these social compensation measures, the foundation believes it will be necessary to support the switch to climate-friendly heating systems from the state, i.e. from funds from the EU member states. As a result, homeowners would then have to invest less money out of their own pocket to buy a heat pump or connect their house to the district heating network. Here too, however, it is crucial that the funding “arrives where it is most urgently needed,” says Sara Hagemann from the Bertelsmann Foundation.
Source: Bertelsmann Foundation, Policy Brief 2026/01