Social Climate Fund to help those most affected by energy and mobility poverty

This article is brought to you in association with the European Commission.

Parliament committees back setting up a new fund to help vulnerable citizens cope with the increased costs of the energy transition.

The committees on the Environment, Public Health and Food Safety (ENVI) and on Employment and Social Affairs (EMPL) adopted today, with 107 votes in favour, 16 against and 15 abstentions, their position on the Commission proposal to establish a Social Climate Fund. The new fund will benefit households, micro-enterprises and transport users that are vulnerable and particularly affected by the impact of the transition towards climate neutrality.

Addressing energy and mobility poverty

EU member states will be required to submit “Social Climate Plans”, after consulting with local and regional authorities, economic and social partners as well as civil society. The plans should contain a coherent set of measures to address energy and mobility poverty.

Firstly, temporary direct income support measures would be funded (such as a reduction in energy taxes and fees) to tackle the increase in road transport and heating fuel prices. According to MEPs, such support would be limited to a maximum of 40% of the total estimated cost of each national plan for the period 2024-2027, and would be phased out by the end of 2032.

Secondly, the fund would cover investments in buildings renovation, renewable energy and a shift from private to public transport, car-pooling and car-sharing and using active modes of transport to get around, such as cycling. Measures may include fiscal incentives, vouchers, subsidies or zero-interest loans.

The report introduces a number of improvements to the Commission proposal, among which:

– a definition of “mobility poverty”, referring to households that have high transport costs or limited access to affordable public or alternative modes of transport required to meet essential socio-economic needs;

– specific focus in the plans on socio-economic challenges facing islands and the outermost regions;

– a reminder that the member states must respect fundamental rights, including the rule of law, in order to benefit from EU funds.

Quotes

Co-rapporteur Esther de LANGE (EPP, NL) said: “The energy transition should not become a transition for the ‘happy few’. That’s why we have ensured that the money from the fund actually reaches people who need the most support in the transition. Measures include, for instance, vouchers for the vulnerable to insulate their homes and developing a second-hand electric car market.”

Co-rapporteur David CASA (EPP, MT) said: “The Social Climate Fund is the EU’s answer to the challenge of making the green transition towards climate neutrality a social one. This fund will invest billions in energy efficiency for households and micro-enterprises, which will reduce energy demand and soften the impact of climate measures. All this makes it an essential component of securing European climate neutrality by 2050.”

Next steps

The proposal is scheduled to be adopted during Parliament’s plenary session in June, before negotiations with member states can begin.

Background

The Social Climate Fund is part of the “Fit for 55 in 2030 package”, which is the EU’s plan to reduce greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels in line with the European Climate Law.