The national ambassadors of the Member States to the EU discussed, on Friday 17 June, the upcoming ‘Environment’ Council on 28 June, during which the French Presidency aims to have a general approach adopted on the Social Climate Fund (SCF).
The principle and the contours of the Fund, intended to accompany the economic shock of the energy transition for the most vulnerable households and the most exposed micro-enterprises, were validated in mid-May by the MEPs of the European Parliament’s Environment (ENVI) and ‘Employment’ (EMPL) Committees (see EUROPE 12955/16) and should be reconfirmed next week in a mini-plenary session in Brussels.
In a final compromise text dated 15 June, the French Presidency of the EU Council sounded out the Member States on the budgetary architecture of the Fund, its duration, the co-financing rule and the retroactivity of the Fund.
It explained all this in a note accompanying the latest draft political agreement (‘general approach’) which was to be discussed on Friday.
On the budgetary architecture of the Fund, the Presidency proposes a Fund fed by externally earmarked revenue from the sale of emission allowances from the ETS2 system (affecting the buildings and transport sectors), so as not to “immediately reopen the Multiannual Financial Framework, while benefiting from a series of guarantees linked to the European budget”.
In this context, it proposes the amendment of “Article 30d of the ETS Directive to provide for the transfer of a capped amount of revenue as external assigned revenue”.
On the duration of the Fund, it proposes to implement it over the period 2027-2032 to take account of the proposed staggered entry into force of the ETS2. The Parliament foresees an implementation from 2024.
The volume of the fund is also revised to €59 billion, to take into account the reduction in the duration of the fund. However, on the early establishment of the Fund, it was expected to propose, “as a compromise, a retroactive eligibility of expenditure from 1 January 2026”.
It proposes to keep direct income support by introducing a ceiling of 40% of the total estimated costs of the plans, which is also the position of the European Parliament.
On co-financing, the French Presidency of the EU Council also proposed to delete the national contribution foreseen in the Commission proposal (“The financing of actions included in the plans submitted by the Member States, with national contributions, is the most appropriate solution”, according to the Commission proposal).
At the time of writing, none of the sources we contacted had been able to give us feedback on the ambassadors’ perception of these French proposals.
According to a parliamentary source, the abolition of the national contribution would be intended to leave room for manoeuvre in the use of ETS2 revenues, but this could be detrimental to the fight against fuel poverty.
The French compromise would also not propose much progress on a more democratic governance of the Fund and control by the Parliament, nor on the concept of social conditionality, which is included in the Parliament’s position.
Another problematic aspect is that the EU Council still assumes that European households remain covered by the ETS2 on buildings and road transport, whereas the European Parliament would like to exclude them (at least until 2029) and thus restrict the scope of ETS2 to commercial buildings and commercial road transport activities. EUROPE will continue to follow this story.
Links to documents: https://aeur.eu/f/277 ; https://aeur.eu/f/278 (in French) (Original version in French by Solenn Paulic)