Impact of extended emissions trading on vulnerable transport users

Subject: Impact of extended emissions trading on vulnerable transport users

The Commission’s proposal for a Regulation establishing a Social Climate Fund (COM(2021) 568 final) provides a definition of the notion of ‘vulnerable transport users’.

In this proposal, the European Commission admits that the inclusion of buildings and road transport in emissions trading, proposed as part of the revision of Directive 2003/87/EC (ETS Directive), will increase the price of fossil fuels. The European Commission also admits, and I quote, that ‘(...) the increase in the price for fossil fuels will have significant social and distributional impacts that may disproportionally affect (...) vulnerable micro-enterprises and vulnerable transport users (...)’.

1. What criteria and parameters were used for the definition of vulnerable transport users?

2. Drawing on the impact assessment carried out, or any other study/working document relied on in support of this regulation, could the Commission provide information, broken down by Member State, on how many people fall within the notion of ‘vulnerable transport users’, i.e. how many people from lower middle-income households cannot afford to buy a zero or low-emission vehicle or switch to alternative sustainable modes of transport, including public transport?

Answer given by Executive Vice-President Timmermans on behalf of the European Commission (20 April 2022)

The Commission included in its proposal for the Social Climate Fund (SCF) (1) a definition of ‘vulnerable transport users’, which includes those households or micro-enterprises using various transport and mobility options, who are significantly affected by the price impacts of the new emissions trading system (ETS) for buildings and road transport.

They should include affected lower and lower middle-income households who lack the means to purchase zero‐ and low-emission vehicles or to switch to alternative sustainable modes of transport, including public transport, particularly in rural and remote areas.

The SCF proposal leaves this definition rather open. This gives flexibility to Member States, who are best placed to identify the concrete target groups in their Social Climate Plans and can take into account their national context and specificities.

The problems addressed by the proposed Fund and the possible solution were analysed in two consecutive impact assessments accompanying the Climate Target Plan (2) and the revision of the ETS Directive (3).

For the road transport sector, the Commission found the relative impact on consumer prices and therefore on fuel costs to be largest in those Member States, which currently apply the lowest excise duties on diesel and petrol (see Section 6.3.2.1.2 of revision of the ETS Directive).

The initial share of transport fuel costs within total final consumption expenditure tends to be higher for medium income households, and clearly lowest for poorer households.

The proposed SCF would effectively mitigate the social impact of carbon pricing by providing support for the necessary investments and temporary direct income support for vulnerable groups.

⋅1∙ COM(2021)568.

⋅2∙ SWD(2020)176.

⋅3∙ SWD(2021)601.