In this policy brief, EWI researchers analyze the shortterm and longterm effects of a CO2 price on the decarbonization of the building sector, particularly residential buildings. Special attention is given to the proposed „ten-step model“, which would split the CO2 costs between landlords and tenants from 2023 onwards.
The analysis shows that the short-term abatement potential for emissions in the residential sector is low and that a CO2 price can have little steering effect. In the long term, a CO2 price increases the economic viability of investments. It thus incentivizes building renovations and/or heating replacements. However, numerous sector-specific circumstances (e.g., long investment cycles, high discount rates) inhibit the necessary adjustments to the capital stock. Thus, a CO2 price is not sufficient to decarbonize residential buildings quickly.
