BERLIN, Nov. 29 -- Germany's upper house of parliament, Bundesrat, on Friday halted several key parts of German climate package, such as tax reduction on train tickets and financial incentives for the restoration of older buildings.
The Bundesrat decided that the planned tax reduction on tickets for long-distance train journeys now had to be discussed in a mediation committee in order to reach a compromise on the issue of cost distribution between Germany's national government and federal states.
To promote a switch from cars to environmentally friendly trains, the German government's climate package had originally stipulated a reduction of value-added tax on long-distance train tickets from 19 to 7 percent.
"I do not think anybody is trying to prevent cheap rail prices at this point," said Daniel Guenther, state premier of Schleswig-Holstein. However, it was "unacceptable" that the resulting losses in tax revenues would only occur to Germany's federal states and municipalities.
The planned financial incentives for the energy efficiency restoration of buildings would also have to be examined by the mediation committee, because Germany's federal states were fearing tax losses and demanded a different distribution of the financial burdens.
Other measures agreed in the climate package, such as CO2 pricing in transport and building sector could now go ahead because they did not require the approval of the federal states.
CO2 pricing for buildings and transport is set to start in 2021 with an entry price of 10 euros (11.1 U.S dollars) per ton of carbon emitted. By 2025, the CO2 price is scheduled to gradually rise to 35 euros and will be determined by an exchange market for carbon certificates after 2026.