Social Climate Fund

KEY POINTS

Vulnerable households, micro-enterprises and transport users

Directive 2003/87/EC sets up a system for greenhouse gas emission allowance trading to promote emission reductions, including from buildings and road transport. Three target groups of the Social Climate Fund are identified by Regulation (EU) 2023/955 as being significantly affected by the cost impact of the new emission trading for buildings and road transport:

• vulnerable households are defined as those experiencing energy poverty, including those on low and lower-middle incomes, and which lack the means to renovate the building they occupy;
• vulnerable micro-enterprises are those which do not have the means to renovate the building they occupy, purchase zero- and low-emission vehicles or switch to alternative sustainable modes of transport, including public transport;
• vulnerable transport users are defined as individuals and households experiencing transport poverty, including those on low and lower-middle incomes, and who do not have the means to purchase zero- and low-emission vehicles or to switch to alternative sustainable modes of transport, including public transport.

Social climate plans

Each Member State should submit a social climate plan to the European Commission after consulting local and regional authorities, economic and social partners and civil society. The plans should cover measures and investments to address the impact of carbon pricing for the building and road transport sectors on vulnerable households, micro-enterprises and transport users in order to ensure affordable heating, cooling and mobility.

Eligible measures and investments

The plans may include supporting the following measures and investments to be designed for lasting impact:

• building renovation, in particular for vulnerable households and micro-enterprises occupying the worst-performing buildings, including for tenants and people living in social housing;
• access to affordable energy-efficient housing, including social housing;
• building decarbonisation, such as electrification of heating, cooling and cooking, through access to affordable and energy-efficient systems;
• integrating renewable energy generation and storage, including through renewable energy communities, citizen energy communities and other active customers to promote self-consumption of renewable energy;
• targeted information, education, awareness and advice on cost-effective measures and investments, available support for building renovations and energy efficiency and sustainable and affordable mobility and transport alternatives;
• access to zero- and low-emission vehicles and bicycles, including financial support or tax incentives;
• public and private infrastructure, including purchase of zero- and low-emission vehicles, recharging and refuelling infrastructure and development of a second-hand zero-emission-vehicles market;
• incentives to use affordable and accessible public transport;
• private and public entities developing and providing sustainable mobility on demand, shared mobility services and active mobility options.

Member States may include in their plans direct income support for vulnerable households and transport users to reduce the impact of the increase in road transport and heating fuel prices. Such direct support must:

• be temporary and decrease over time;
• represent no more than 37.5% of the estimated total costs of the plan.

Financing

A maximum of €65 billion from 1 January 2026 to 31 December 2032 is allocated to the fund. In addition, Member States must contribute at least 25% of the estimated total costs of their plans.

Member States may request transfers to the fund from the cohesion policy programmes under shared management established by Regulation (EU) 2021/1060. The Member States may also transfer up to 15% of their allocation from the fund to the cohesion policy programmes.

Information

Those receiving support from the fund should be informed on where the funds originate, including where they benefit from these funds through intermediaries. Information should include the EU emblem and the words ‘funded by the European Union – Social Climate Fund’.

Transparency

The Commission should forward the plans submitted by Member States, and the decisions, simultaneously and on equal terms to the European Parliament and the Council of the European Union without undue delay.