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European Green Deal

€145bn Social Climate Fund to help poorer households with transition

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Today (14 July), the European Commission adopted a broad set of proposals to meet the target of reducing net greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels. Achieving these emission reductions required by the recently finalized European Climate Law requires fundamental transformations in everything from transport to energy. The package includes a €145bn Social Climate Fund to help poorer households with the transition. 

European Green Deal Executive Vice President Frans Timmermans said: “At the end of the day, people are worried about whether this is going to be fair. I think fairness is a crucial point within societies and between member states. The onus is on the Commission, to prove that this leads to solidarity and to fairness in this transition. If we can prove that I think there will be less resistance. If not, I think the resistance will be massive. What we do explicitly is acknowledge that today, it is already difficult for some people to pay their energy bills or for transport.”

European Commission President von der Leyen said: “The Social Climate Fund will not only be direct income support for those on lower incomes, it will go into investments in innovation. So that, for example, the market for electric vehicles becomes broader. If the demand rises, then supply rises and then prices tend to go down.”

Social Climate Fund

The Commission recognized that while in the medium to long-term, the benefits of EU climate policies clearly outweigh the costs of this transition, climate policies risk putting extra pressure on vulnerable households, micro-enterprises and transport users in the short run. That is why the package tries to fairly spread the costs of tackling and adapting to climate change, with a new ‘Social Climate Fund’ aimed at helping citizens finance investments in energy efficiency, new heating and cooling systems, and cleaner transport. 

The Fund, financed by the EU budget, using an amount equivalent to 25% of the expected revenues of emissions trading for building and road transport fuels, will provide €72.2bn of funding for 2025-2032, based on a targeted amendment to the multiannual financial framework. This will be doubled by national match funding of 50% taking the fund to €144.4bn to enable a socially fair transition.

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