The Social Climate Fund and ETS2 transform a cost – that of CO₂ – into resources dedicated to supporting citizens and businesses in the transition. Delaying their implementation would cause direct harm to the country.

From 2027, ETS2 – the European emissions trading system – will come into force, extending the price of CO₂ to transport, residential construction and small and medium sized enterprises (SMEs).

Fossil fuel suppliers will have to purchase emission allowances, generating an estimated revenue in Italy of between €21 and €55 billion by 2032, to which indirect tax revenues will be added.

These resources are earmarked. In fact, they must finance policies to reduce fossil fuel consumption and support households and businesses in the transition.

Part of the funds will go to the Social Climate Fund (SCF), with an allocation for Italy of €9.3 billion (2026-2032), of which €7 billion will be allocated directly from the European fund.

Why the Social Climate Fund is important

ETS2 is not an additional tax. On the contrary, it is a tool that fully returns the revenue collected to citizens, in the form of investments in energy efficiency, renewables and fiscal or financial support.

The SCF aims to make the transition fairer, allowing vulnerable households and microenterprises to access clean technologies.

The estimated additional costs for vulnerable households (€0.6-1.3 billion/year, with a CO₂ allowance cost of €45-100/t) are largely offset by the annual allocation of the Fund, amounting to €1.55 billion/year2. This allocation may be increased by Member States through higher ETS2 revenues in the event of higher allowance prices.

The risks of postponing the introduction of ETS2

In the European debate, several governments are questioning the need for ETS2. However, a delay in its implementation would mean:

• giving up guaranteed and earmarked revenues to support the transition;

• leaving households and businesses without adequate tools to face the transition;

• reducing Italy’s allocation from the Social Climate Fund from €7.02 billion to €5.9 billion and weakening the country’s ability to lead a just transition model that is predistributive and not based solely on compensation.