Rising CO₂ costs: Why property owners should act now
The more emissions a building generates, the more expensive it becomes to operate – because the price of CO₂ is set to rise significantly. For commercial real estate owners, this means not only higher costs but also new opportunities.
The cost of CO₂ is becoming an increasingly important factor for commercial property owners. Those who use fossil fuels such as gas or oil already pay a surcharge on top of their actual energy costs – and will pay considerably more soon.
This is partly due to the rising price of CO₂ itself, but also because the distribution of CO₂ costs between tenants and owners is changing.
Rising prices
The price of CO₂ currently stands at €55 per tonne. From 2027, free pricing will apply in emissions trading, with prices of €100 per tonne and above being considered realistic.
"Due to strict European emissions caps and, in some cases, slow progress in decarbonisation across Europe, the price of CO₂ for fuels is expected to rise significantly. Studies indicate that prices of up to €200 per tonne are possible," according to the Deutsches Institut für Wirtschaftsforschung (German Institute for Economic Research).
A commercial building emitting 200 tonnes of CO₂ per year already incurs costs of €11,000 annually at a CO₂ price of €55 per tonne. At €200 per tonne, this would amount to €40,000.
New allocation of CO₂ costs: owners' responsibility
Currently, a flat-rate allocation of 50/50 applies to non-residential buildings, meaning that owners and tenants share the CO₂ costs.
Soon, a tiered model is expected to be introduced for commercial properties, similar to that already in place in the residential sector. Under this system, CO₂ costs will be allocated dynamically: the poorer the energy performance of a building, the greater the share that the owner must bear. The aim is to increase pressure on inefficient buildings to reduce emissions.
The CO₂ costs borne by owners will therefore be influenced by two factors:
- The price of CO₂ per tonne – which is certain to rise
- The new allocation model – which will negatively impact owners if high emissions are generated during building operation
The CO₂ costs borne by property owners cannot be passed on to tenants. They therefore have a direct impact on cash flow and can negatively affect returns – especially if no countermeasures are taken to reduce emissions. For portfolio investors, ESG managers, and family offices, the CO₂ price is becoming an increasingly strategic consideration.
Options for action: reduce emissions, cut costs
In the long term, heating systems using gas or heating oil must be converted to CO₂-neutral alternatives. In the short term, the best option is to automatically reduce energy consumption and thus emissions.
Often, this does not require major conversions or investments in new heating systems. More efficient operation of existing technology can already make a significant contribution to reducing emissions. Digital solutions that automatically adjust heating, ventilation, and air conditioning to actual demand show great potential here, reducing both emissions and operating costs.
Conclusion
The CO₂ price is here to stay – and it will rise further, driven by clear political targets. Companies that still rely on fossil fuels must prepare for rising costs.
At the same time, reducing emissions offers a clear economic opportunity: those who implement efficiency measures increase their profitability and position themselves proactively in an increasingly regulated environment.
back to overview