Europe’s energy co-ops have joined calls urging the EU to protect the Social Climate Fund, after moves to delay the EU emissions trading system for buildings and road transport (ETS2) by one year, from 2027 to 2028.
On 5 November, the European Council agreed to introduce a provision to postpone ETS2 coming into force. This is part of an agreement reached by the Council regarding amendments to the European climate law (ECL), which includes a binding intermediate target of a 90% reduction in net greenhouse emissions by 2040, compared to 1990 levels.
On 13 November, MEPs also supported a proposal by member states to postpone ETS2 by one year.
In response, the European federation of energy communities (REScoop.eu), along with 42 other organisations and coalitions, is calling for reassurance that the Social Climate Fund will not be impacted. The fund was created to alleviate the social and economic impacts arising from ETS2.
In a letter to three European commissioners and executive vice-president Teresa Ribera, these organisations warn that “delaying the introduction of ETS2 will postpone critical climate action and raise prices in 2028, while costing member states €50bn in lost auction revenues”. They add that the measure “creates uncertainty as to whether the Social Climate Fund will be affected/cut”.
The letter calls for strong protection and enhancement of the Social Climate Fund, including by ensuring that it begins in full next year.
It also asks the European Commission to work closely with civil society, representatives of vulnerable households, researchers and the renewables industry, to ensure that the member states’ social climate plans are “ambitious, tailored to beneficiaries, and effective” and submitted in time.
Other measures suggested include encouraging member states to top up their social climate plans with progressive fiscal policies and conduct an impact assessment.
The European Investment Bank and European Commission are also currently exploring a Frontloading Facility, a mechanism to allow member states to receive early funding from future ETS2 revenues to support decarbonisation. The letter asks for Social Climate Fund spending principles to be applied to the Frontloading Facility.
“We are concerned by recent proposals by the Council and Parliament to delay ETS2 and we state clearly: the Social Climate Fund, with a €86.7bn budget for socially oriented climate actions, is an essential tool that we must protect – and even increase. We cannot cut funding that helps vulnerable people access clean technologies,” said Chris Vrettos, senior policy advisor at REScoop.
With both the Council and the Parliament adopting their positions, negotiations will be carried out between the latter and member states on the final shape of the law.
The Commission will continue technical-level discussions with member states about ETS2 implementation and play a role in trilogue negotiations between Parliament and Council for the adoption of a single joint text.
