On Wednesday 8 February, the Member States’ ambassadors approved the political agreement reached at the end of December between the Czech Presidency of the EU Council and the European Parliament rapporteurs on the ‘Social Climate Fund’, which should mitigate the ‘social’ effects of the entry into force of the new Emissions Trading System for road transport and buildings (ETS2) (see EUROPE 13097/17).
ETS2 will come into force in 2027; the fund will have started in 2026, financed the first year by ETS1 and then by ETS2. The total for the fund is set at €65 billion by 2032, excluding national co-financing.
While the allocation for 2026 is based on the auctioning of 50 million allowances from ETS1, revenues from the new Emissions Trading System for buildings, road transport and other sectors will finance the fund from 2027 onwards, the Swedish Presidency said in a preparation note ahead of the meeting.
The start of the fund one year earlier than the start of the new ETS for buildings, road transport and additional sectors in 2027 was “one of the key elements that allowed the Parliament to accept the budgetary architecture of the fund financed through external assigned revenue”, the note says.
If the ETS2 ‘emergency brake’ is activated and its implementation is postponed to 2028, the total volume of the fund would be reduced to €54.6 billion, “since no financing would be available from the system in the year 2027”, the note also says.
This was a concern for some parliamentarians who wondered how the fund would be financed in 2027 without ETS2 and without financial compensation. The solution would be that the revenues generated in 2026 by ETS1 would then be spread equally over 2027.
The European Parliament’s Committee on Environment will be invited to approve the agreement on 9 February.
Link to the note: https://aeur.eu/f/59a (Original version in French by Solenn Paulic)