Social Climate Fund

The Social Climate Fund (SCF) - established under Regulation (EU) 2023/955 - is the one of the EU’s financial mechanisms to counterbalance the negative socioeconomic effects of the extension of the Emissions Trading System (ETS 2) that will apply to the transport and heating & cooling sectors. It will leverage EUR 86.7 billion for the entire union (including member state co-funding of 25%) for the period 2026-2032. 

Although the SCF’s limited size and scope does not yet offer the comprehensive framework that the EU needs to tackle the impacts of the transition on affected vulnerable individuals, its implementation must be seized as an opportunity to balance out the social cost of climate action as much as possible. Member States must frontload SCF investments (boosted with additional ETS 1 and ETS 2 revenues) and provide targeted structural solutions that break cycles of fossil fuel dependency and poverty.

The tracker, a collaborative project between REScoop.eu and CEE Bankwatch, provides an overview of the submitted National Social Climate Plans of 27 Member States. In particular, it analyses whether and to what extent the Plans:

• were drafted with transparent and broad public participation,
• are targeting vulnerable households, microenterprises, and vulnerable transport users adequately, including with the support of social intermediaries,
• include measures and investments that effectively respond to the national context of energy and transport poverty
• are coherent with other national strategies (e.g., national building renovation or energy poverty reduction strategies), and in synergy with other funding sources (e.g., mobilisation of broader ETS2 revenues). 

An accompanying policy briefing shares guiding principles on how Member States could draft effective National Social Climate Plans. Moreover, a dedicated checklist proposes actionable measures and investments that Member States can include in their Plans, drawing from existing examples.