CORRECTED-UPDATE 1-German Lower House approves tax on greenhouse emissions for fuels, heating, gas

(Corrects to read lower (not upper) house in headline and paragraph 1)

FRANKFURT, Oct 8 (Reuters) - Germany’s lower house of parliament on Thursday approved a tax on greenhouses gas emissions to be levied in stages from 2021, raising retail prices of car fuels such as gasoline and diesel, heating oil and natural gas.

The move, which entails alterations to a law on fuel emissions trading, envisages a tax of 25 euros ($29.41) per tonne of carbon dioxide equivalent in 2021, rising to 55 euros per tonne in 2025.

Gasoline prices will rise by 7 cents per litre and by 8 cents per litre for diesel from next year.

There will be measures to offer some compensation to certain industries with especially high energy consumption which compete internationally and therefore would be placed at a disadvantage.

The government expects to raise 7.4 billion euros through the tax next year.

The funds will be used to cap a surcharge on household power prices that supports renewable energy production.

It will also go towards helping commuters offset some of their rising travel costs by granting tax refunds.

The head of the BDEW electricity and gas industry association, Kerstin Andreae, welcomed the law.

“The introduction of CO2 pricing in heating and transport is an important milestone in German energy and climate policy,” Andreae said. “It will promote decarbonisation in these sectors.”

$1 = 0.8501 euros Reporting by Markus Wacket, writing by Vera Eckert, editing by Jason Neely