On Wednesday 22 June, the European Parliament gave final approval to its report on the Social Climate Fund (SCF) – tabled by Esther de Lange (EPP, Netherlands) and David Casa (EPP, Malta) – by 479 votes to 103 with 48 abstentions. Its aim is to help the most vulnerable households meet the costs of the energy transition.
Unlike the texts on the revision of the Emissions Trading System (ETS) and the Carbon Border Adjustment Mechanism (CBAM), the SCF text was not reopened in terms of substance during the surprise vote on 8 June (see EUROPE 12968/21).
The SCF, which is linked to the future ETS2, will be used to finance investments in energy efficiency, decarbonisation and sustainable transport and, in the form of national social climate plans, will be used to support direct aid measures to households.
It will benefit the most vulnerable households, micro-enterprises and transport users, while SMEs will remain covered by other instruments.
The fund, noted the European Parliament, would complement financial resources of Member States in two ways: “temporary direct income support measures (such as a reduction in energy taxes and charges) to address rising road transport and heating fuel prices, as well as long-term structural investments in building renovation, renewable energy, the shift from private to public transport, car-sharing and car-pooling”.
It will be funded by around 25% of the revenues linked to the inclusion of commercial road transport and commercial buildings, only in the EU Emissions Trading System (ETS) and will be supplemented by revenues raised from the auction of an additional 150 million ETS allowances.
For the period up to 2027, this calculation would therefore represent 16.39 billion euros, with the possibility of reaching a total of 72 billion euros by 2032. This increase would be linked to the gradual inclusion of private buildings and road transport in the ETS from 2029 onwards.
The European Parliament also emphasised that In the event of a rise in the carbon price, additional resources should be allocated to the Fund to ensure that the appropriations available for the Social Climate Fund in the EU budget increase in line with the carbon price, so as to further support vulnerable households and transport users in the transition to climate neutrality. These annual reinforcements should be reflected in the Multiannual Financial Framework through a “carbon price adjustment”.
The European Parliament vote was welcomed by several European Parliament groups, such as the Greens/EFA, and the French MEP Marie Toussaint who believes that “it is essential to provide support to the poorest people in the energy transition”. “This will be the first time that EU funds will be directly used to lift the most vulnerable households out of fuel and mobility poverty”, she said.
Link to the text: https://aeur.eu/f/299 (Original version in French by Solenn Paulic)