The three EU member states examined in this Oeko-Institut study are Bulgaria, Czechia, and Poland. The aim of this study is to analyse what groups are likely to be most affected by the ETS2 in these countries, examine the current draft SCPs, and identify policy gaps.

General recommendations for policy design and to address policy gaps include:

1. Funding through the SCF is and should be targeted at vulnerable groups and energy poor households. A focus on the identified policy gaps in the individual countries can be addressed with ETS2 revenues, as well as focusing on areas with high savings potentials, such as Worst-Performing-Buildings.

2. While direct financial payments are important to ensure that vulnerable households are not further burdened with unreasonable energy costs, investments that ensure long-term transformations in the buildings sector towards climate neutrality are key. The focus should remain on improvements in energy efficiency and investments into low and zero-carbon technologies.

3. Overall, deep renovations are needed to ensure noticeable reductions in energy costs due to the low energy efficiency standards overall in the three MS. As ETS2 prices rise, higher energy efficiency standards and technological switches in heating will be needed to avoid high costs. The focus therefore must remain on providing extensive funding for deep retrofitting measures. Additional funds from the ETS2 revenues and funding beyond the timeline foreseen for the SCP will be necessary.

4. Within the buildings sector, policy design needs to consider the housing situations that vulnerable households are in. This includes determining a focus on SFH (single-family homes) or MFH (multi-family homes) or whether to allocate funds to support tenants and is essentially a question of adequate targeting. ETS2 revenues should be funnelled into programs that address the policy gaps identified.