CO2 Cost Allocation Act Explained: How to Calculate the Landlord-Tenant Split
Germany's CO₂ Cost Allocation Act (CO₂KostAufG) uses a ten-tier table to split CO₂ costs from fossil fuel heating between landlords and tenants. What decides the split is the building's specific CO₂ output in kg CO₂ per square meter per year, a figure you can calculate yourself from consumption, emission factor and heated floor area. For residential buildings, the same nationwide ten-tier table applies across the board.
If you handle billing for a housing company or manage a portfolio, this calculation comes around every year, building by building. Once you've worked through the four calculation steps cleanly for one property, you can apply the same logic across the whole portfolio and quickly spot whether a statement is even plausible.
Which tier ultimately applies, and therefore who pays how much, comes down to four things:
- The tier table runs from under 12 kg CO₂/m²/year (tenant pays 100 percent) to over 52 kg CO₂/m²/year (landlord pays 95 percent).
- The specific CO₂ output is calculated as energy content multiplied by the emission factor, divided by the heated floor area.
- A consumption difference of just 90 kWh can shift the tenant's share by several percentage points at a tier boundary.
- For non-residential buildings, a fixed 50/50 split still applies, regardless of the building's actual CO₂ output.
How does the CO₂ Cost Allocation Act split costs between landlords and tenants?
Residential buildings have used the same ten-tier model since January 1, 2023: the lower a building's specific CO₂ output, the larger the share the tenant pays, because a low output mainly reflects personal heating behavior rather than the building envelope. Under the schedule to sections 5 through 7 of the CO₂KostAufG, this produces the following ten tiers.
| Tier | Specific CO₂ output (kg CO₂/m²/year) | Tenant share | Landlord share |
|---|---|---|---|
| 1 | under 12 | 100 % | 0 % |
| 2 | 12 to under 17 | 90 % | 10 % |
| 3 | 17 to under 22 | 80 % | 20 % |
| 4 | 22 to under 27 | 70 % | 30 % |
| 5 | 27 to under 32 | 60 % | 40 % |
| 6 | 32 to under 37 | 50 % | 50 % |
| 7 | 37 to under 42 | 40 % | 60 % |
| 8 | 42 to under 47 | 30 % | 70 % |
| 9 | 47 to under 52 | 20 % | 80 % |
| 10 | 52 and above | 5 % | 95 % |
This tier table has stayed unchanged since the law took effect and still forms the basis for every heating cost statement involving fossil fuels. In practice, a building with a renovated envelope and a modern heating system usually lands in one of the lower tiers, while an unrenovated older building with an aging gas boiler often ends up in one of the upper tiers, where the landlord covers most of the CO₂ costs.
How do you calculate your building's specific CO₂ output in four steps?
At its core, the formula is simple: energy content multiplied by the emission factor, divided by the heated floor area, rounded to one decimal place. Section 5, paragraphs 1 and 2 of the CO₂KostAufG sets out this formula, and you can work through it for any building in four steps.
- Determine annual consumption: Take the energy content in kWh from the fuel bill for the billing period.
- Calculate the CO₂ output: Multiply consumption in kWh by the appropriate emission factor for the energy source.
- Relate it to floor area: Divide the result by the building's heated floor area and round to one decimal place.
- Assign the tier: Place the rounded value in the tier table and read off the cost share.
For step two, you need the official emission factor under the EBeV 2030 regulation, which differs by energy source:
- Natural gas: 0.20088 kg CO₂/kWh, based on the lower heating value.
- Heating oil (EL): 0.2664 kg CO₂/kWh, or 2.6763 kg CO₂ per liter.
- LPG: 0.2358 kg CO₂/kWh.
These emission factors have applied unchanged since 2023 and will stay in place through 2030.
Worked example: A multi-family building's fuel bill shows 180,000 kWh of natural gas per year across 1,200 m² of heated floor area. The math: 180,000 kWh × 0.20088 kg CO₂/kWh = 36,158.4 kg CO₂. Divided by 1,200 m², that comes to 30.1 kg CO₂/m²/year, rounded to one decimal place. That places the building in tier 5 (27 to under 32 kg CO₂/m²/year): the tenant pays 60 percent, the landlord 40 percent.
Once you know the relevant certificate price, you can turn that tonnage into a euro figure. For calendar year 2026, the German Emissions Trading Authority sets the price used for cost allocation at 60 euros per ton of CO₂, while fuel suppliers actually buy certificates on the market within an auction range of 55 to 65 euros. For our example building, that works out to roughly 36.16 t CO₂ times 60 euros, or around 2,169.50 euros in total CO₂ costs. Split 60/40, about 1,301.70 euros falls to the tenant and around 867.80 euros to the landlord.
What input data do you need, and where does the tier shift unnoticed?
The exact annual consumption from the fuel bill, the correct emission factor and the actual heated floor area decide the result. Even small deviations in any one of these figures feed straight through to the tier, and from there into real money.
The most common source of error is confusing gross and net calorific value for natural gas. The emission factor based on the lower heating value runs about 10 percent higher than the one based on the higher heating value, because energy performance certificates under the GEG require the higher-heating-value factor, while fuel bills are usually calculated on the lower heating value. At 20,000 kWh of consumption, that produces a discrepancy of around 400 kg CO₂, often enough to miss a tier entirely.
Common mistake: Building classification counts heated floor area, but heating cost statements often use a different usable floor area instead. If not every unit is connected to the central heating system, their floor area share needs to be subtracted from the total living area first, otherwise the wrong reference area distorts the specific CO₂ output.
A worked example from an industry portal shows just how much that can matter: a consumption difference of only around 90 kWh, barely 1 percent, is enough to cut the tenant's share to a quarter of its original size at a tier boundary, as when 51.8 kg CO₂/m²/year in tier 9 (a 20 percent tenant share) rounds up to 52.0 kg CO₂/m²/year in tier 10, where the share drops to just 5 percent. A boundary like this is exactly where it becomes clear whether the calculation was based on real metered data or only on estimates. Our article on real-world CO₂ monitoring versus estimates looks at how much more reliable actual readings are compared with estimates.
What applies to non-residential buildings, and what changes under the Building Modernization Act from 2028?
Non-residential buildings still split CO₂ costs straight down the middle: landlord and tenant each pay 50 percent, regardless of the building's actual output. The separate tier model for non-residential buildings, announced in the law back in 2022, still hasn't been introduced. Legal specialists confirm that it remains on hold for lack of a solid data foundation and isn't currently in sight.
For existing buildings, the system itself isn't changing for now. However, the Building Modernization Act passed in July 2026 added new sections 5a through 5d to the CO₂KostAufG. For gas, oil or LPG heating systems newly installed from 2028 onward, a 50/50 split of gas network charges and CO₂ costs applies from January 1, 2028. From January 1, 2029, a 50/50 split of the extra cost of mandatory climate-friendly fuel blending is added, capped at a fuel share of 30 percent.
Good to know: Heat pumps and pure wood or pellet heating systems fall outside the CO₂KostAufG entirely. Electricity falls under the EU-wide ETS 1 emissions trading scheme. Biomass isn't covered by the national fuel emissions trading scheme at all, so neither energy source generates CO₂ costs that could even be allocated.
Our article on who pays the CO₂ price, tenants, landlords or both traces how this split between tenants and landlords came about politically in the first place, and where the debate on further adjustments currently stands.
Who applies the split in the billing statement, and what happens if it's wrong?
As a rule, the landlord or the billing service provider they've engaged calculates the tier and lists the tenant's and landlord's shares directly on the annual heating cost statement. The Heating Costs Ordinance provides the regulatory framework for this, including monthly consumption information and fixed billing requirements for the entire operating cost statement, as our article on the revised Heating Costs Ordinance as an opportunity for the industry describes.
If a tenant supplies their own heat, for example through an individual gas-fired unit heater with their own gas contract, they calculate the specific CO₂ output of their apartment themselves using the same formula, and then actively claim reimbursement for the landlord's share directly from the landlord. If the landlord's statement doesn't fully show the CO₂ cost split, the tenant is entitled to a flat 3 percent reduction on their entire heating cost share.
Another exception involves public-law restrictions such as heritage protection or a comparable preservation statute. If such a restriction demonstrably prevents a significant energy upgrade, the landlord's share under the tier table is cut in half. The landlord has to actively prove that these conditions are met; a simple reference to heritage status isn't enough on its own. If the restrictions affect both the building envelope and the heating system upgrade, the cost split is dropped entirely, and the tenant bears the full CO₂ cost alone.
In the end, it's data quality per building that decides
The first evaluation report on the CO₂KostAufG, published by the responsible ministry in April 2026, confirms that the tier model works in principle. At the same time, it finds that landlords carry a noticeably smaller cost share than tenants across all rental relationships. The even 50/50 split that the middle tier theoretically implies barely shows up in practice.
For your portfolio, that means a wrong emission factor or an unclear floor area basis skews the tier and shifts real costs between tenant and landlord, often by an amount a single property feels for the entire year. Keeping consumption data consistent and verified across multiple buildings, for example with KUGU VIS Betriebstransparenz, lowers that risk from the outset instead of having to fix every property individually later.
For your next heating cost statement, check whether the floor area used matches the building's classification and whether the emission factor is based on the lower or higher heating value, before you accept the stated landlord share as it stands.
Frequently asked questions about CO₂ cost allocation
How do you calculate CO₂ output when a tenant has their own gas-fired unit heater?
With their own gas-fired unit heater, the tenant calculates the specific CO₂ output of their apartment themselves, since no central billing service provider pools the consumption data. They use the same formula a landlord would, consumption multiplied by the emission factor and divided by floor area, and then claim reimbursement for the landlord's share directly from the landlord.
What CO₂ certificate price applies for cost allocation in 2026?
60 euros per ton of CO₂ is the price that applies for cost allocation across all of calendar year 2026, set by the German Emissions Trading Authority at the Federal Environment Agency. That figure differs from the 55 to 65 euro auction range in which fuel suppliers actually buy certificates on the market.
What happens if the billing period is shorter than a year?
For a billing period shorter than a year, the tier table's threshold values are reduced proportionally to the actual time span. If the supply period and the billing period differ, you also need to convert the calculated emissions to the agreed period before assigning the tier.
How does heritage protection affect the landlord's share?
The landlord's share under the tier table is cut in half if heritage protection demonstrably prevents a significant energy upgrade. The landlord has to actively provide this proof; simply pointing to heritage status isn't enough on its own.
Does the landlord really pay half the CO₂ costs in practice?
No, on a nationwide average, the share landlords carry sits noticeably below the tenant share, as the first evaluation report on the CO₂KostAufG found in April 2026. The even split implied by the middle tier barely shows up across rental relationships as a whole, which is why the report identifies a need for adjustment, among other things for district heating.
