Social and Climate Fund: funding sufficiency

Subject: Social and Climate Fund: funding sufficiency

An EU-wide CO2 emissions trading system for the transport and building sectors will have a substantial impact on vulnerable households and is likely to increase the number of people living in energy poverty. The proposal for a Social and Climate Fund aims to ensure that vulnerable groups are included and not left behind in the European Green Deal. This is no small task.

1. As renovations in the social housing sector alone are expected to cost over EUR 13 billion per annum until 20501, does the Commission expect to provide further avenues of funding beyond the insufficient proposed ring-fencing of the emissions trading system for buildings and transport?

2. What additional funds and measures does the Commission envisage to alleviate the impact of the emissions trading system in buildings and transport on energy poverty and vulnerable households?

1 https://www.housingeurope.eu/resource-1589/is-the-delivery-of-a-social-green-deal-right-on-track

Answer given by Executive Vice-President Timmermans on behalf of the European Commission (25 November 2021)

The Social Climate Fund has a clearly defined objective. The Commission has proposed this Fund to address the social impacts arising from the new emissions trading system for fuels used in the buildings and road transport sector on vulnerable groups in the EU.

The Fund would provide EUR 72.2 billion (in current prices) of funding to Member States, for the period 2025-2032. With a proposal to draw on matching Member States’ funding, the Fund would mobilise EUR 144.4 billion (in current prices) for a socially fair transition, corresponding to 50% of the expected revenues from the new emissions trading system.

By mid-2028, the Commission is to provide inter alia the European Parliament with an evaluation report on the Fund, including the relevance of the financial envelope.

As to the available funds, currently, the Commission and the Member States work hard to deploy the support from the Recovery and Resilience Facility. This Facility makes EUR 723.8 billion (in current prices) available in grants and loans to help Member States recover from the COVID-19 pandemic by supporting their reforms and investments with an emphasis on green and digital transformation.

Financing of targeted measures and investments for energy efficiency and building renovation, particularly for those citizens at risk of energy poverty, can be available under cohesion policy funds and InvestEU, in line with their respective objectives, scopes and intervention logics. Member States also dispose of revenues from the existing EU Emissions Trading System to address social impacts on vulnerable consumers.

From September 2020 to August 2021, the auctioning of emissions allowances generated EUR 26.3 billion in revenue (2).

⋅1∙ https://www.housingeurope.eu/resource-1589/is-the-delivery-of-a-social-green-deal-right-on-track

⋅2∙ Including the auctioning for the Modernisation Fund and the Innovation Fund