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A tenant’s entitlement to reimbursement under the German Carbon Dioxide Cost Allocation Act

The Carbon Dioxide Cost Allocation Act (Kohlendioxidkostenaufteilungsgesetz, CO²KostAufG) has introduced an entitlement for tenants to reimbursements from their landlords in cases where a tenant contracts directly with energy suppliers for the rented premises and no contracts go via the landlord. In the following section the essential features of such an entitlement to reimbursement are specified.

Background to the cost allocation

The purpose of the legislation is to allocate the fuel-related carbon dioxide costs included in the heating and hot water costs between landlords and tenants in relation to their spheres of responsibility and scope of influence. This is intended to create an incentive to minimise emissions. Since the allocation between landlords and tenants – at least in the area of housing – is based on quotas that, in turn, are based on the energy efficiency class of the buildings, it will be in the interests of the landlord for the fabric of the building to be as energy efficient as possible and, if necessary, to retrofit the building. Then again, tenants wish to minimise their cost burdens and are able to do this by managing their energy consumption.

The essential features of the cost allocation

Up to now, the CO² costs, as part of the cost of fuel, were fully borne by tenants. No provision was made for the landlord to contribute to the costs. This will now change – for billing periods starting 1.1.2023 landlords will also have to contribute to the CO² costs. Tenants will however be free to choose the timing and frequency of their reimbursement claims. The only thing that matters here is determining the total CO² emissions that relate to the reimbursement period. This is particularly important because this will make it possible to calculate the right proportion of the costs. The calculations will be based on a tiered model that is relevant for specific carbon dioxide emissions. In commercial tenant-landlord relationships the allocation quota is currently always 50%, although there are plans to introduce a tiered model in the future.

Requirements related to reimbursement claims

The legislation, in Section 6(2), provides for some formalities for the tenants’ claims for reimbursement. For example, tenants have to assert their claims in text form. An e-mail requesting reimbursement is sufficient. In addition, this claim for reimbursement has to be made within 12 months after the tenant has received the final bill for fuel or heat supplies. This is a preclusive period that is supposed to provide the landlord with certainty about the reimbursement claim. 

Please note: The reimbursement claim has to contain minimum verifiable information, such as, the carbon dioxide emissions produced during the reference period. The tenant, as the contractual partner, has to forward the necessary data from the utility company to the landlord.

Landlord’s obligations following receipt of the reimbursement claim

According to Section 6(2) sentence 3 CO²KostAufG, the landlord may offset a tenant’s claim for reimbursement as part of the next annual reconciliation of service charges. If there is no offset then the landlord has to reimburse this amount to the tenant no later than 12 months following receipt of the reimbursement claim. According to Section 6(2) sentence 4 CO²KostAufG, this period for payment postpones the due date of the reimbursement claim. 


Given that costs will be capped at least until the expiry of the statutory price limit in national fuel emissions trading, it thus remains to be seen to what extent tenants will actually exercise their right to claim reimbursements. It is likely that, for the present, carbon dioxide prices will therefore remain in a low range. Thus, for some tenants the effort involved in making their claim for reimbursement may appear too great.

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