Vote on the EU Social Climate Fund

On Wednesday, May 18, the EMPL and the ENVI Committee will vote on a proposal for the new Social Climate Fund.
The aim of the fund is to support households, micro-enterprises, and transport users, which are particularly affected by the transition towards climate neutrality, carbon pricing as well as energy and mobility poverty. 

In the negotiations the Greens/EFA Group could make important points:

MEP Katrin Langensiepen, Green shadow rapporteur in the EMPL comments:

“The participation in the Green transition should not be a matter of income. If we do not want to increase inequalities, we need to support those who are or risk to be on the margins of our societies. That is why we insisted to focus the resources of the fund on the most “vulnerable” and those in or at risk of poverty. For the first we managed to include a definition of energy and mobility poverty.

Another Green success is that the Social Climate Fund mostly focused on structural investments. The Member States will only be allowed to use 40% of their national envelopes for direct income support. For us Greens the emphasis on structural change is very important. In the long run, we do not want to fund fossil fuels. Instead we want to support renovation waves for the worst performing buildings and local mobility concepts. Local and regional partners will have to be involved in the elaboration of the national Social Climate Plans. ”

 

MEP Sara Matthieu, shadow rapporteur for the Greens/EFA in the ENVI committee: 

"This is a breakthrough for a fairer climate policy: after two decades we are finally making the biggest polluters pay by ensuring that most of the free pollution permits in the emissions trading system are phased out by 2030. At the same time, we will help lift the most vulnerable in Europe out of energy and mobility poverty. We cannot let these people bear the heaviest burden while continuing to give big polluters a free lunch. By narrowing the scope of ETS2 we managed to protect households and particularly those already at risk of poverty.”

For Sara Matthieu, the new fund is unique: “It is the very first time that vulnerable households are directly supported in the transition with European funding. We also oblige member states to use all of the revenues of the new carbon price on commercial heating and transport fuels to finance social climate measures and investments. This was not the case in the Commission proposal and makes the overall available budget larger, even with a smaller ETS2 ."

Matthieu concludes that this is a good first step but warns that “we will need more funding to lift the most vulnerable households and businesses out of poverty. That's why we as greens will look out to increase social spending in the EU in the future, through the social climate fund or other means. The windfall profits of the oil and gas industry, caused by the high energy prices and the Russian invasion in Ukraine, could provide a meaningful contribution, for instance."

Green core achievements in the negotiations: 

 

Focus on vulnerable groups (households, transport users, small entrepreneurs), especially those affected by energy or mobility poverty. SMEs do not fall within the scope of the fund.
For the first time, an EU-wide definition of energy and mobility poverty is included in EU law.

Focus on long-term, structural measures: 
In addition to 40% of the national allocation for direct income support, Member States must also offer the same beneficiaries structural measures or investments that effectively lift them out of energy and mobility poverty. E.g.: building retrofits to contribute to EPBD targets, access to affordable energy efficient housing, access to zero emission vehicles and bicycles. 

Involvement of regional actors: 
National social climate plans are adopted after meaningful consultation with local and regional authorities, economic and social partners and relevant civil society organisations in line with the partnership principle.

Funding outside ETS 2: 
Greens/EFA were initially against ETS2 in order not to further burden tenants and landlords. 

The budget was reduced due to the limited scope of ETS2, but combined with the provision that 100% of ETS2 revenues should be used to finance social climate action (even though ETS2 revenues go to Member States' budgets - about 75% of ETS2 revenues), the total amount spent on social climate action remains more or less the same and is estimated at about EUR 44.5 billion for the period 2024-2027. The budget of the SCF for the period 2028-2032 will be determined following the future MFF negotiations. In addition, the size of the fund may increase if the ETS 2 for commercial transport and construction generates more revenue than in the Commission's original assessment.

Different co-financing rates will apply: In general, Member States will have to contribute 50% to all measures, except for direct income support, where they will have to contribute 60% of the costs. 

Rule of law conditionality will also apply to the Social Climate Fund.

Stronger scrutiny by the European Parliament:
The ENVI-EMPL Committees can ask the Commission twice a year to monitor the implementation of the Fund and express their views in resolutions. The Commission shall take into account any elements arising from these resolutions. Annual reporting on the implementation of the Fund, in particular on how much CO2 emissions have been saved through investments in energy efficiency, renovation of buildings, etc.