Commission provides new guidance to Member States on implementing Social Climate Fund and fulfilling Social Climate Plans

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

The European Commission has issued new guidance to help EU Member States effectively implement the Social Climate Fund (SCF) and complete their Social Climate Plans (SCPs).

Starting in 2026 and mobilising over €86 billion, the Social Climate Fund has been created to ensure the transition to a greener economy is fair and leaves no one behind, and to support vulnerable households and small businesses in their efforts to switch to cleaner energy and transport. It will use the revenues from the new emissions trading system for fuel combustion in buildings, road transport and additional sectors (ETS2) to help vulnerable people, small businesses, and transport users cope with the costs of the clean transition — especially in housing and transport.

Today’s guidance document builds on previous Commission guidance and technical assistance to Member States by setting out a series of principles for implementing the SCF. It also provides practical advice to help EU countries deliver their Social Climate Plans (necessary to access funding) and implement them effectively so that support swiftly reaches those exposed to energy or transport poverty, and social fairness is guaranteed.

In addition, the integration of Social Climate Plans into National and Regional Partnership Plans will enable more targeted and effective investments, allowing Member States and regions to overcome their specific challenges. Furthermore, this new framework will streamline the use of EU funds, leading to more efficient implementation and a stronger focus on delivering the Fund’s objectives.

Main principles for implementing the SCF:

• Predictability: The Social Climate Plans set a payout value for each measure and investment. Payments will happen once the milestones and targets are achieved.
• Performance-based payments: SCF funds will only be disbursed when milestones and targets are fully met. This ensures payments are tied to actual results.
• Streamlined designation of authorities: Member States can rely on existing structures already used for Cohesion Policy programmes and the Recovery and Resilience Facility (RRF), making implementation faster and simpler.
• Inclusive governance: Member States should actively involve stakeholders, including regional and local authorities, social partners and civil society, to ensure the SCPs reflect needs on the ground.
• Transparency and accountability: Member States and the Commission will use a single digital system to track and report on all measures, investments and beneficiaries. This provides transparency, clarity and trust in how funds are used.
• Protection of EU financial interests: Member States must put in place strong safeguards to prevent, detect and address fraud, corruption, conflicts of interest, and double funding, protecting the integrity of SCF resources.

Next steps

To receive funds under the Social Climate Fund, Member States have to incorporate the new ETS2 – legislation which is already in force – into national law.  They must submit their Social Climate Plans to the Commission for approval, setting out their national measures and investments to support those most vulnerable. Once a plan is formally submitted, the Commission has up to five months to complete its assessment. Adopted plans will be announced by the Commission.

Member States will be able to submit their first payment request to the Commission as of 31 July 2026 provided they have implemented the approved plans, and agreed milestones and targets have been achieved.

The SCF is designed to bridge the current and next EU multi-annual financial framework (MFF). It draws on the lessons learned and best practices from the RRF and Cohesion Policy funds. 

Background

The Social Climate Fund will provide significant financial support to the Member States to finance measures and investments identified in the national Social Climate Plans.

Running from 2026 to 2032, the Fund is expected to mobilise at least €86.7 billion, combining ETS2 revenues and Member States’ contributions (at least 25% of the costs of their plans). The Fund will support the most vulnerable groups through structural measures and investments in energy efficiency, the renovation of buildings (e.g. insulation), clean heating and cooling (e.g. heat pumps), and integration of renewable energy (e.g. solar panels), as well as in zero- and low-emission mobility and transport, including public transport.

The Commission is working closely with Member States to facilitate the development of their Social Climate Plans and calls for their swift submission as the SCF kicks off one year before ETS2 starts operating in 2027. Two Member States (Sweden and Latvia) have formally submitted their plans to date, and more than half of Member States have shared draft versions. In this process, the Commission has provided regular exchanges since 2023 through the Commission’s SCF expert group on climate change policy, and issued Guidance on the Social Climate Plans and technical guidance on the application of the Do No Significant Harm principle in March 2025.