Fit For 55

European Parliament starts work on Social Climate Fund

The Parliament’s Committees on Employment and Social Affairs and on the Environment, Public Health and Food Safety have begun working on evaluating and improving the Commission’s proposal for the creation of a Social Climate Fund. The Fund is part of the ‘Fit For 55’ package that was presented last summer, and which is composed of various legislative initiatives that will contribute to reducing carbon emissions by 55% by 2030. Although achieving a CO2-neutral economy is vital for our planet’s survival and for guaranteeing a good quality of life, the green transition must be just and egalitarian and it must not put an economic burden on citizens, especially those with fewer resources.

To mitigate the negative consequences that the transition can have on the most vulnerable, the Commission has proposed to create a Social Climate Fund. €72.2 billion of EU funds between 2025 and 2032 will be dedicated to vulnerable households, micro-enterprises and transport users affected by new measures. The proposal focuses on these groups because the Fund is tightly linked to the Commission’s plans for the Emissions Trading System (ETS). That is, the regulation of the amount of CO2 that Member States can release annually and what they can trade amongst each other. The ETS will be enlarged to incorporate road transport and buildings, which could increase living costs for those in low-efficiency housing and for transport users with fewer resources and living in poorly connected areas.

The Fund will be used to subsidise compensatory measures such as temporary income support, initiatives to increase the energy efficiency of buildings, decarbonise heating and cooling, generate energy from renewable sources, and facilitate access to low- or zero-emission transport.

Member States will have to submit their Social Climate Plans by June 2023, detailing the actions to be put in place. These will be part of their National Energy and Climate Plans, which already include, for instance, measures to fight energy poverty. Each Member State will have to finance at least 50% of the measures with their own resources. A further 25% will come from the additional income arising from the introduction of the two new sectors in to the ETS.

The Group of Socialists and Democrats at the European Parliament will work to ensure that the Social Climate Fund contributes to guaranteeing a fair green transition that leaves no one behind.

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