Lack of a specific impact assessment for the Social Climate Fund

Subject: Lack of a specific impact assessment for the Social Climate Fund

According to the Commission, ‘the need for impact assessments, which take into account the views of all those impacted, is more important than ever’1.

The absence of a specific impact assessment for the EUR 72 billion Social Climate Fund is justified on the grounds that ‘the problems addressed by the proposed Fund and the possible solution directions are analysed in two consecutive impact assessments, therefore no specific impact assessment was carried out’2.

The impact assessment for the 2030 Climate Target Plan states that with regard to the social and distributional impacts of policy aspects, ‘many of the policy aspects depend on the details of policy proposals, thus only a few policy related considerations can be provided at this stage’3.

1. Why was there no specific mention of the Social Climate Fund in the inception impact assessment for the amendment of the EU Emissions Trading System and can the Commission clarify whether this was also the case for the 2030 Climate Target Plan?

2. Can a public consultation and impact assessment that did not take into account or explain the Social Climate Fund fulfil the requirement for an impact assessment to be carried out for all legislative initiatives ‘expected to have significant economic, environmental or social impacts‘4?

3. Can the Commission clarify why a separate and specific impact assessment was not conducted for the Social Climate Fund?

1 Commission Work Programme 2021: https://eur-lex.europa.eu/legal-

content/EN/TXT/?uri=CELEX%3A52020DC0690

2 Proposal for a regulation of the European Parliament and of the Council establishing a Social Climate Fund:

https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:52021PC0568&from=EN. 3 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52020SC0176. 4 Impact assessments should provide a clear rationale and analysis of weather regulatory intervention is

needed and whether it is appropriate to intervene at the EU level, and should also summarise results and highlight trade‑offs between potential economic, social and other impacts associated with various policy options. Impact assessments should be carried out for all legislative initiatives which are ‘expected to have significant environmental or social impacts.’ Interinstitutional Agreement between the European Parliament, the Council of the European Union and the European Commission on Better Law-Making: https://eur- lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:L:2016:123:FULL&from=EN

Answer given by Executive Vice-President Timmermans on behalf of the European Commission (25 January 2022)

When proposing the establishment of the Social Climate Fund, the Commission was explicit that no specific impact assessment was carried out, as the problems addressed by the proposed Fund and the possible solutions were analysed in two relevant impact assessments, i.e. regarding the Climate Target Plan (CTP IA) (5) and the revision of the Emission Trading System Directive (ETS IA) (6).

The CTP IA found that an increase of the 2030 emission target to ‐55% increases the share of energy related households expenditures by around 0.7 to 0.8 percentage points.

The ETS IA refines this analysis, finding that emissions trading for buildings will not affect households equally, but would likely have a regressive impact on disposable income, as low-income households, in particular in low-income Member States, tend to spend a greater proportion of their income on heating.

With regard to road transport, the CTP IA recognised the central importance of investments and the ETS IA found that it is typically the lower-middle and middle parts of the household income classes where the proportion of spending on transport is highest.

The ETS IA concludes that, while carbon pricing reduces carbon emissions and increases energy and transport costs for consumers, at the same time it raises revenues which can be used to address the social impacts. This conclusion was confirmed in the public consultation on the revision of the ETS Directive.

Several stakeholders referred to the social impacts of an increase in the price for heating and transport fuels on the most vulnerable households, highlighting the need to support these groups’ investments to reduce their fossil fuel consumption.

⋅1∙ Commission Work Programme 2021: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52020DC0690

⋅2∙ Proposal for a regulation of the European Parliament and of the Council establishing a Social Climate Fund: https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?

uri=CELEX:52021PC0568&from=EN.

⋅3∙ https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52020SC0176.

⋅4∙ Impact assessments should provide a clear rationale and analysis of weather regulatory intervention is needed and whether it is appropriate to intervene at the EU

level, and should also summarise results and highlight trade‐offs between potential economic, social and other impacts associated with various policy options. Impact assessments should be carried out for all legislative initiatives which are ‘expected to have significant environmental or social impacts.’ Interinstitutional Agreement between the European Parliament, the Council of the European Union and the European Commission on Better Law-Making: https://eur-lex.europa.eu/legal- content/EN/TXT/PDF/?uri=OJ:L:2016:123:FULL&from=EN

⋅5∙ SWD(2020)176.

⋅6∙ SWD(2021)601.