What is the Social Climate Fund?

The Social Climate Fund (SCF) is an EU initiative designed to mitigate the social impacts of the new Emissions Trading System (ETS2), which applies carbon pricing to fuels used in buildings and road transport. Operating from 2026 to 2032, the fund will provide approximately €86.7 billion in targeted support for lower-income groups and micro-enterprises. Member states must submit Social Climate Plans (SCPs) by June 2025 to access funding, which is allocated based on need. While the SCF supports investments in energy-saving renovations and zero-emission transport, it is limited to alleviating new poverty risks and is deemed insufficient to address the root causes of existing energy and transport poverty in Europe. The document recommends increasing available funds, avoiding fossil fuel lock-in by prohibiting 'low-emission' fossil-based investments, and ensuring earlier fund availability through loans.

• The Social Climate Fund (SCF) is designed to alleviate energy and transport poverty caused by the transition to zero-emission mobility and decarbonised buildings, specifically addressing the social impacts of the ETS2 carbon price on fuels for buildings and road transport.
• Between 2026 and 2032, the SCF will provide a total of €86.7 billion in support, consisting of up to €65 billion from ETS1 and ETS2 auctioning and a mandatory 25% co-financing contribution from member states.
• Funding is distributed among member states based on need, with Poland receiving the largest share (17.6%), followed by France (11.2%), Italy (10.8%), Spain (10.5%), and Romania (9.3%).
• To access funds, member states must submit Social Climate Plans (SCPs) by June 2025, which must include estimates of price increase effects, identification of vulnerable groups, and concrete decarbonisation policies.
• SCF expenditures are primarily for emissions reduction technologies, such as energy-saving renovations and zero-emission vehicles, though up to 37.5% of a plan can be used for temporary income support.
• The SCF is considered insufficient to combat the root causes of existing energy and transport poverty, as it only targets new risks; for example, 41 million people in Europe already cannot adequately heat their homes.
• The document warns that allowing 'low-emission' fossil-fuel based investments, such as efficient gas boilers, could lead to fossil fuel lock-in for lower-income groups for up to 15 years.

APA

Carbon Market Watch (n.d.). What is the Social Climate Fund? https://carbonmarketwatch.org/wp-content/uploads/2024/07/Joint-SCF-briefing-080724.pdf

Chicago

Carbon Market Watch. What is the Social Climate Fund? n.d. https://carbonmarketwatch.org/wp-content/uploads/2024/07/Joint-SCF-briefing-080724.pdf.

Wikipedia

{{cite report |author=Carbon Market Watch |title=What is the Social Climate Fund? |url=https://carbonmarketwatch.org/wp-content/uploads/2024/07/Joint-SCF-briefing-080724.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{carbonmarketwatchndwhat, author = {{Carbon Market Watch}}, title = {{What is the Social Climate Fund?}}, institution = {Carbon Market Watch}, url = {https://carbonmarketwatch.org/wp-content/uploads/2024/07/Joint-SCF-briefing-080724.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }