Why adopting the Social Climate Fund is the right choice for the EU – Joint statement by social and climate NGOs

Ahead of the vote in the plenary session of the European Parliament on 18 April 2023, 17 entities, including NGOs working on social and climate issues and green business, published a joint statement in support of the Social Climate Fund, the first EU Fund specifically dedicated to provide financial support to vulnerable households, transport users and micro-enterprises in the ecological transition.

The provisional agreement on a regulation establishing the Social Climate Fund (SCF) reached by the colegislators on 18 December 2022 during the last round of trilogue negotiations is soon going to be formally endorsed by Council and Parliament. These votes will mark the end of a legislative process that started in mid-2021, when the European Commission proposed the creation of the SCF as part of the first Fit for 55 package under the European Green Deal to cushion the social costs of the clean energy transition.

In 2022, SOLIDAR welcomed this initiative, as it marked an evolution in the Commission’s view of a “Just Transition”: from “leaving no one behind” in the regions and sectors in Europe that depend on fossil fuels or carbon-intensive processes, mainly through the Just Transition Mechanism and Fund, to helping those suffering from energy and mobility poverty all across Europe. As highlighted in the joint statement, the SCF represents a milestone towards a more systematic integration of a social dimension into EU climate and environmental policies, which SOLIDAR strongly advocates for. 

The text adopted by the European Parliament today foresees that the SCF will run from 2026 to 2032 and will become a part of the EU budget that is fed by external assigned revenues (mostly emissions trading allowances), – this way advoiding to reopen the 2021-2027 MFF. The Fund will provide a maximum of 65 billion Euros of funding to Member States to use to finance measures and investments to support vulnerable groups impacted by higher carbon pricing. Each Member State will be required to contribute with up to 25% of the total estimated costs of their national Social Climate Plan. A ceiling of 37.5% will apply to the share of temporary direct income support financed under the Social Climate Plans.

The joint statement by SOLIDAR and 16 other entities calls for the adoption of the Fund and highlights some of its strengths. Nevertheless, it also points out that the amount originally allocated to the SCF in the Commission’s proposal (which foresaw that the Found would mobilise a total of €144.4 billion in the period of 2025-2032) has been severely reduced. So did the estimated value of national co-financing of the Social Climate Plans, which decreased from 50% to 25%. This has also been SOLIDAR’s main message on the SCF since the beginning: rather than merely aiming at mitigating the social impact of extending emissions trading to road transport and buildings or other similar climate policies, the SCF’s primary objective should be to drive a socially just decarbonization in the long term, which would require the allocation of sufficient financial resources. As adopted today, the SCF budget is likely to be insufficient to significantly contribute to cover the investment and social compensation needs in road transport and buildings.

You can also read the statement on the Euractiv website.

SOLIDAR thanks Transport & Environment for leading the cooperation on this statement.