The Social Climate Fund: Materialising Just Transition Principles?

The EU's Social Climate Fund (SCF) was officially approved by the European Parliament on 18 April 2023 as part of the broader Green Deal initiative, which seeks to expand the scope of the Emission Trading Scheme (ETS) to encompass buildings, transport, and other sectors. This extension of the ETS is expected to result in increased energy costs and gasoline prices for households and businesses. To assist vulnerable households, micro-enterprises, and transport users in mitigating the financial impact of these price increases, EU member states may use resources from the SCF to finance various measures and investments. The SCF will primarily be funded through the revenues generated by the new emissions trading system, with a maximum allocation of 65 billion, supplemented by national contributions. Temporarily established for the period of 2026-2032, the fund aims to provide support during this specified timeframe.

The initiation of the SCF has received praise from various NGOs advocating for a just transition. Supporters highlight its significance in integrating a social dimension into EU climate policies, despite some remaining weaknesses. The SCF’s spending rules are commended for striking a suitable balance between financing structural investments and providing temporary direct income support to vulnerable households. Investments from the Fund will enable these households to renovate their homes, adopt energy-efficient technologies, and access renewable energy and sustainable transportation. The requirement for government consultation with sub-national administrations and civil society organizations is welcomed. Notably, the SCF introduces a definition of transport poverty, aiding member states in identifying those eligible for support, marking a first in EU policy.

Regarding the aforementioned weaknesses, there exists a range of concerns. Firstly, the projected timeline may pose a limitation. Initiating green investments for vulnerable households only a year before the introduction of carbon pricing may not allow sufficient time for the desired impact. Projects related to energy renovation and improved public mobility infrastructure typically require several years to yield tangible results. Additionally, while member states are required to include consultation with various stakeholders in their national ‘Social Climate Plans’ (SCPs), the level of participatory approach outlined in the proposed regulation is minimalistic, raising concerns about ensuring procedural justice.

This landmark EU proposal offers fascinating research opportunities for me on both academic and personal levels. As my research project focuses on vulnerabilities within the European energy transition and renovation wave, I could not have asked for better data opportunities to draw comparisons between the EU member states. The SCF, with its call for national Social Climate Plans, addresses one of my key research questions, as it prompts member states to identify the most vulnerable populations in their respective countries and develop effective policies to target them. The process of identifying these vulnerable groups, engaging with them in policy drafting, and assessing the effectiveness of the resulting policies is of great interest to me. Moreover, the SCF presents an opportunity to examine the extent to which these policies are successful in achieving their goals.

By integrating the SCF into the broader Green Deal initiative, the EU demonstrates its commitment to addressing climate change while considering social equity. While there are concerns regarding the projected timeline of the SCF and the level of stakeholder participation outlined in the proposed regulation, these weaknesses could be overcome, and present additional research avenues on themselves. It goes without saying that I eagerly anticipate the further development and concretisation of SCPs and the broader SCP roll-out.