On November 14th, ZERO hosted an enlightening online workshop exploring the transformative role of the Social Climate Fund (SCF) in addressing energy and transport poverty while enabling a fair transition to a fossil-free future.

The discussion touched on key elements of the SCF and the European Union’s Emissions Trading System Phase 2 (ETS2). Speakers highlighted practical strategies for developing National Social Climate Plans (NSCPs) and presented innovative ways to use SCF resources effectively.

LIFE Effect: for fair and effective carbon pricing

The first speaker, Eleanor Scott, expert on EU carbon markets at Carbon Market Watch, addressed ETS2 revenues and how the LIFE Effect project can serve as an important tool for achieving a fair and effective carbon pricing system under ETS2.

The presentation dived into the EU Emissions Trading System (ETS2), extending carbon pricing to building fuels and road transport from 2027 and that aims for a 44% reduction in covered emissions by 2030 (compared to 2005 levels).

While ETS2 incentivises lower emissions and bolsters renewable energy, it also risks exacerbating energy and transport poverty, potentially leading to public backlash against climate policies.

The Social Climate Fund (SCF), capped at €86.7 billion, emerges as a critical tool for addressing social concerns tied to ETS2. By ensuring targeted support for low-income households and regions reliant on carbon-intensive industries, the SCF aims to mitigate inequalities while fostering a just transition. However, current data on spending measures is incomplete, underscoring the need for improved transparency and robust Social Climate Plans (SCPs).

The LIFE Effect – project spanning Belgium, Czechia, Germany, Greece, Italy, Portugal, and Poland – advocates for effective and equitable carbon pricing. Its focus includes leveraging ETS2 revenues for impactful climate action, promoting renewable energy, decarbonising heating and cooling systems, and supporting climate-friendly transport. The project invites stakeholders to join its network, participate in expert discussions, and contribute to policy development.

Social Climate Fund (SCF) and National Social Climate Plans (NSCPs) overview

Starting with the question, What is the aim of the Social Climate Fund?, our second speaker, Luke Haywood from the European Environmental Bureau (EEB), provided a comprehensive overview of the fund’s objectives and implementation.

He explained that the Social Climate Fund (SCF) is designed to alleviate the financial burden on low-income households, assist communities most affected by rising energy prices, and reduce dependency on fossil fuels.

The fund, central to the EU’s transition to a low-carbon economy, emphasizes equitable support for vulnerable groups and aims to foster acceptance of climate policies. Haywood also outlined the SCF timeline, which includes the preparation and submission of National Social Climate Plans (NSCPs) in 2025, the first payments in 2026, and a detailed evaluation phase starting in 2028, ensuring that the fund’s objectives align with long-term energy transition goals.

Renewable energy and public participation featured prominently as central themes in the SCF and NSCPs. Haywood shared examples of innovative projects, such free photovoltaic installations for low-income households in Italy, energy communities in Portugal, cooperative renewable schemes in Germany and Belgium, and initiatives to provide off-grid renewables in Romania.

These projects exemplify the fund’s goal to empower vulnerable communities while advancing climate policy acceptance.

Social Climate Plans can enable clean affordable transport

Our final speaker, Bernardo Galantini from Transport & Environment, emphasised the critical role of Social Climate Plans in addressing transport poverty and facilitating the transition to clean, affordable mobility.

He highlighted the challenges of making electric vehicles (EVs) accessible. He noted that high purchase prices and the dominance of larger, less affordable models like SUVs limit availability for low- and middle-income households. Galantini advocated for social leasing schemes as a solution, where compact, low-environmental-impact EVs could be offered at affordable monthly rates.

Drawing on the success of France’s social leasing initiative, which provided EVs to eligible low-income households for as little as €49-150 per month, he demonstrated how such programs can democratize access to clean transport. He called for EU-wide adoption of similar schemes, tailored to national contexts, to ensure an equitable transition and reduce reliance on fossil fuels under the ETS2 framework.

From equitable carbon pricing and renewable energy projects to social leasing schemes for electric vehicles, the discussions underscored the importance of inclusive measures to foster a fair transition. This workshop sets the stage for continued collaboration in building sustainable and socially just climate policies.