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Reopening the MSR decision represents a significant risk to weaken climate ambition particularly in the current political climate where several countries are seeking to roll back climate policy; ETS2 included.
The study shows that implementing ETS2 can be a significant opportunity to both tackle the widespread phenomenon of energy and transport vulnerability in Greece and reduce the carbon footprint of buildings and road transport. The key is to leverage funding sources beyond just the Social Climate Fund
With some countries only beginning public participation in June (and others not having started at all), NGOs are concerned that measures outlined in NSCPs will be insufficient to protect those most vulnerable to ETS2 prices. National governments must prioritise completing their plans as soon as possible, but not at the expense of meaningful stakeholder engagement.
National plans for spending climate funds, which the government must submit to the European Commission by mid – 2026, represent a historic opportunity to rethink how common money is used – success will depend on the cooperation of social policy experts and climate and communication specialists between society and the government.
“The ETS is finally functioning as a proper climate tool,” said Sam Van den plas, policy director at Carbon Market Watch. “Instead of introducing risky loopholes, we need to strengthen what’s already working.”
The Italian approach to ETS2 and the SCF must move beyond ex-post compensation to embrace a pre-distributive logic. Rather than merely offsetting costs after they arise, policies should proactively direct ETS2 revenues toward systemic reforms that reduce both emissions and inequality. This includes investing in renewable energy, energy efficiency and low-carbon mobility, particularly targeting vulnerable households and microenterprises.
