The European Commission’s Social Climate Fund

The proposed EU regulation creating a Social Climate Fund is meant to help EU citizens meet the social and economic costs of the climate and energy transitions. It was adopted by the Commission on 14 July 2021 as part of the 'fit for 55' legislative package. Under the 'fit for 55' package, the Commission proposed extending the Emissions Trading Directive to the buildings and road transport sectors, where the pace of decarbonisation has been insufficient to meet EU decarbonisation objectives. The Social Climate Fund would help address any social impacts that arise from the new system, with the twin objectives of supporting vulnerable households and micro-enterprises adopt clean mobility solutions and renovate their homes while also potentially granting them temporary direct income support . Vulnerable households, micro-enterprises and transport users are likely to be disproportionally affected by the increase in the price for fossil fuels. Low-income households tend to spend a larger part of their incomes on energy and transport and in some regions lack access to alternative, affordable mobility and transport solutions. The funding of the future Social Climate Fund will come from a dedicated share (25%) of revenues from the auctioning of emissions allowances under the new system. The Commission's current proposal would allocate a total of EUR 72.2 billion (in current prices) to the Fund over the 2025-2032 period, which would be complemented by an equal contribution from Member States. 

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