CO₂ Costs for Landlords in 2026: How the 10-Level Model Decides Your Share

In 2026, landlords pay between 0 and 95 percent of their building's CO₂ costs, depending on its energy performance. The ten-level model set out in Germany's CO₂ Cost Allocation Act (CO2KostAufG) determines the exact share based on CO₂ emissions per square meter per year. Landlords who know their building's rating can lower that share even without a renovation.

Germany's national carbon price sits for the first time in 2026 within an auction corridor of 55 to 65 euros per tonne, with 60 euros per tonne serving as the reference value for billing. For a multi-family building heated with gas, that translates into costs ranging from zero to several hundred euros per year and residential unit, depending on the level, borne entirely by the owner.

For housing companies and private landlords, one question matters above all: which level their building falls into, and how that value can be deliberately brought down.

How high is the CO₂ price in 2026, and what does the landlord pay?

The CO₂ price for buildings sits within the statutory corridor of 55 to 65 euros per tonne in 2026. For billing under the CO₂ Cost Allocation Act, the German Emissions Trading Authority (DEHSt) applies a reference value of 60 euros per tonne. How much of that you cover as a landlord depends on which level your building falls into.

The price has climbed sharply in a short time. The national CO₂ price started at 25 euros per tonne in 2021 and, through an annually fixed price, rose to 55 euros by 2025. Since 2026, the price has been auctioned for the first time, within the statutory corridor of 55 to 65 euros.

For landlords, that brings short-term planning certainty. On August 12, 2026, the German federal cabinet decided to keep this corridor stable through 2027 as well, as Haufe reports. The reasoning rests on a shift at European level: emissions trading for buildings and transport (ETS2) is being pushed back from 2027 to 2028.

What would have happened without the delay: According to GdW, the umbrella association of the German housing industry, national CO₂ prices of 75 to 85 euros per tonne would already have been possible in 2027 without the ETS2 postponement. From 2028, European emissions trading is then likely to push prices up in earnest.

How strongly this plays out for individual landlords already shows up as a wide spread in real-world billing practice. According to an analysis of 80 heating cost statements by the German Tenants' Association (Deutscher Mieterbund), landlords cover only around 27 percent of CO₂ costs on average, with the rest falling to tenants. Which level applies in a given case depends on the building's CO₂ output, which the following level model quantifies precisely.

The 10-level model: which share does your building carry?

The CO₂ Cost Allocation Act (CO2KostAufG) tiers the landlord's share of CO₂ costs across ten levels, based on the building's CO₂ emissions per square meter per year. A building emitting under 12 kilograms of CO₂ per square meter per year costs the landlord nothing, tenants cover the full amount. From 52 kilograms per square meter per year upward, the landlord takes on 95 percent, leaving tenants with just 5 percent.

Eight further levels sit in between, raising the landlord's share in ten-percentage-point steps. The table below shows the official level breakdown from the schedule to the CO2KostAufG:

In practice, new builds and recently modernized buildings mostly land in the lower levels 1 to 3, with landlord shares capped at 20 percent. Unrenovated older buildings with aging gas or oil heating, on the other hand, often slide into levels 7 to 10, where the owner carries more than half of the CO₂ costs.

How large that difference actually gets in euros shows up in a model calculation for a typical multi-family building heated with gas.

How much do CO₂ costs add up to for a multi-family building with gas heating?

For a multi-family building with eight residential units and 600 square meters of living space, the landlord's CO₂ costs range from 0 to around €1,168 per year, depending on energy performance, at a CO₂ price of 60 euros per tonne. What drives the outcome is how much natural gas the building consumes per square meter.

The model calculation below matches four consumption scenarios from the Heizspiegel for Germany 2025 to the corresponding levels, based on an emission factor of roughly 0.201 kilograms of CO₂ per kilowatt-hour of natural gas. It's meant as orientation, not as a market average for your specific building.

The jump from level 4 to level 8 shows how two effects compound. The landlord's share climbs from 30 to 70 percent, while the building's total CO₂ cost burden grows right alongside the higher consumption. For the owner, both effects add up to a cost increase that runs far beyond the share jump alone.

What drives the landlord's share up?

Two factors mainly determine which level a building falls into: the energy performance of the building envelope and the energy source in use. How the heating system is actually operated adds a further layer, since it shapes consumption too.

Natural gas and heating oil release considerably more CO₂ per kilowatt-hour than lower-carbon heat sources. A building with an aging gas heating system and a poorly insulated facade therefore stacks two unfavorable figures at once: high consumption per square meter and a high emission factor per kilowatt-hour.

It's exactly this combination that hits owners of unrenovated buildings hardest. Where a renovation isn't yet economically viable, optimizing how the system runs remains the most effective lever, as shown in the example of reducing energy consumption in multi-family buildings.

How can you lower your CO₂ cost share without renovating?

Two levers reduce the CO₂ cost share without requiring structural renovation: optimizing the existing heating system, and building a reliable consumption and CO₂ data basis instead of relying on rough estimates. Both work independently of who manufactured the heating system.

The KUGU Energy Platform builds a digital building twin for exactly this purpose, optimizing heating systems automatically and independently of manufacturer. According to the company, KUGU EOS delivers average energy and CO₂ savings of more than 20 percent, with at least 12 percent guaranteed. No replacement of the existing system is required, and according to the company, the costs of deployment are recoverable under Section 7(2) of the German Heating Costs Ordinance (Heizkostenverordnung).

Case in point, Gewobag: During a pilot phase from October 2024 to March 2025, the solution cut around 260,000 kilowatt-hours of energy and more than 50 tonnes of CO₂ across ten buildings belonging to Berlin housing company Gewobag. Energy costs fell by more than €18,000, and the 12 percent savings guarantee was met or exceeded in every property. Based on these results, the rollout is being extended to 250 systems.

The second lever comes from KUGU VIS, the platform's visual information system. It makes meter readings and CO₂ output visible in real time and shows how the system behaves at the same time. The system flags inefficiencies automatically, without an on-site visit. How that compares to relying on pure estimates is covered in the article on CO₂ monitoring in buildings vs. estimation.

What applies to non-residential buildings, hybrid heating systems, and hardship cases?

For non-residential buildings such as offices or retail properties, a flat 50/50 split between landlord and tenant still applies, regardless of the building's energy performance. A dedicated level model for this building category was announced in the law for 2025, but as things stand it has not yet been enacted, as confirmed by IHK Lippe zu Detmold.

Since the reform through the Building Modernization Act (Gebäudemodernisierungsgesetz, GModG), in force since July 29, 2026, a new exception applies to newly installed hybrid heating systems. If a landlord installs a system with a mandatory share of climate-neutral fuels under Section 43 GModG, the flat 50/50 split replaces the level model for that system's CO₂ costs starting January 1, 2028, as Haufe reports. The regular level model remains unchanged for all existing gas and oil heating systems. Small landlords with a maximum of six residential units also gain a new fallback option to the level model for hardship cases, provided several statutory conditions are met at the same time.

Where heritage protection or milieu protection rules block renovation, the landlord's share can be cut in half or waived entirely. This requires that both energy-related building measures and a heating system replacement are legally impossible. In Berlin alone, around 600,000 apartments housing roughly 1.1 million residents sit in milieu protection areas, according to the German Tenants' Association.

Landlords who fail to state the CO₂ cost share in the heating bill, or state it incorrectly, risk a 3 percent cut in tenants' favor on the proportional heating costs. Reimbursement claims for self-supplied heating expire after twelve months.

Making the most of the stable price window through 2028

The stable price corridor through at least 2027 gives landlords something rare in the CO₂ debate: time. From 2028, the European ETS2 emissions trading scheme is likely to push prices up noticeably, while the level model for existing buildings stays in force unchanged.

Landlords who determine their level now and optimize operations move their building into a cheaper category before the price per tonne rises again. That lead time makes the difference between a cost increase you can plan for and one that catches you off guard.

A first concrete step is checking your own consumption data against the official level table, backed if needed by the CO₂ calculation tool from the Federal Ministry for Economic Affairs. From there, it becomes clear whether heating optimization or monitoring delivers the bigger short-term effect.

Frequently asked questions about CO₂ costs for landlords

How exactly do I calculate my CO₂ cost share as a landlord?

The exact share results from your building's CO₂ emissions per square meter per year, which you then place on the official CO2KostAufG level table. An official CO₂ calculation tool works well for a first calculation, deriving emissions directly from fuel type and annual consumption. If your portfolio spans several buildings, a building-specific CO₂ data basis is worth the effort instead of a blanket estimate.

What happens if I don't state the CO₂ cost share?

If the CO₂ cost share is missing from the bill or stated incorrectly, tenants are entitled to cut the proportional heating costs by a flat 3 percent. Reimbursement claims for self-supplied heating also expire after a 12-month cutoff period. A correct, traceable data basis avoids this risk from the outset.

Does the level model also apply to commercial properties?

No, non-residential buildings such as office or retail space are instead subject to a flat 50/50 split between landlord and tenant. This rule applies regardless of the building's energy performance. A dedicated level model for non-residential buildings was originally announced for 2025 but has not been enacted so far.

How does a new hybrid heating system affect my CO₂ cost share?

For hybrid heating systems installed from 2028 onward under the Building Modernization Act's requirement for a mandatory share of climate-neutral fuels, a flat 50/50 split will apply to CO₂ costs going forward. For existing gas or oil heating systems, the regular level model continues to apply.

Can I be exempted from CO₂ cost sharing as a landlord?

Yes, where heritage protection or milieu protection rules block renovation, your share can be cut in half or waived entirely. This requires that both energy-related building measures and a heating system replacement are legally impossible. Since the GModG reform, there is also a hardship fallback option to the level model for small landlords with a maximum of six residential units.