One of the key components of the Fit for 55 legislative package is the extension of the European Emissions Trading System to buildings and road transport (ETS 2). ETS 2 is meant to create an economic incentive to reduce fossil fuel consumption and, thus, greenhouse gas (GHG) emissions. Recognizing the socioeconomic challenges this may bring, especially on those households and businesses already struggling to pay energy bills and participate in the energy transition, the EU established the Social Climate Fund (SCF), designed to mitigate adverse impact on vulnerable communities, small businesses, and transport users. While many concerns remain with regards to the Fund’s scope and size, the initiative showcases a new commitment to ringfence resources and provide concrete tools to “leave no one behind” on the road towards net-zero.

By 30 June 2024, Member States need to bring into force the laws, regulations and administrative provisions necessary to transpose the amendments to the Emissions Trading System. The Regulation establishing the Fund entered into force on 5 June 2023. It is binding and directly applicable in all Member States. To access the Fund, Member States must submit to the Commission a Social Climate Plan (SCP) by 30 June 2025 and will be required to co-finance at least 25 % of the estimated total costs of their Plans.

The SCF is especially relevant for energy communities as it opens new doors for dedicated support towards energy projects that foster social impact. The Regulation highlights the importance of grassroots efforts and local knowledge in driving impactful change, recognising the instrumental role energy communities can play in fulfilling the Fund’s goals.

In this briefing, analyses the relevant provisions for energy communities in the social climate fund and shares recommendations for the national and EU level.