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The social aspect of the Fit for 55 package

Sometimes, having the best intentions is what matters the most. Some other times results count more. When launching its ambitious legislative package called Fit for 55, the European Union has laid out its best intentions to create the world’s first carbon-neutral continent by 2050. 

From a tightening of the existing EU Emissions Trading System (EU ETS) to increased use of renewable energy, from greater energy efficiency to a faster roll-out of low emission transport modes, from an alignment of taxation policies with the European Green Deal objectives to measures to prevent carbon leakage: the Fit for 55 package includes very interesting proposals that now have to be concretely implemented. 

The greatest challenge of all is to guarantee that each Member State and each citizen will benefit from the energy transition. The coronavirus pandemic has made us realise that time is crucial and we need to act now. However, this urgency cannot translate into thoughtless investments. Indeed, it is not just about subsidies for installing solar panels or smarter ways to cool hour homes. It is more about creating a place where communities are proud to live, where citizens feel involved and actively contribute to the fight against climate change. Not because there is an economic return of investment but for what we gain in terms of health and well-being. 

Overall, the European Commission has estimated that the economic and employment impacts of the green transition are going to be positive. With the right accompanying policies in place, the transition could create around one million jobs in the EU by 2030 and 2 million jobs by 2050. At the same time, some jobs will disappear, especially those linked to the fossil fuels industry, thus putting extra pressure on vulnerable categories, particularly in Central and Eastern Europe, a region where most of the remaining coal and lignite mines are located and where natural gas still plays an important role. It is also a region where a low-carbon transport fleet has not really taken off, due to a lack of infrastructure. Additionally, CEE countries inherited a very bad building stock and there is a lot to do to catch up with Western countries.

The Commission sets up the Social Climate Fund

To address such inequalities and to ensure a fair transition, a new Social Climate Fund was proposed to provide dedicated funding to Member States. The Fund would be financed by the EU budget, using an amount equivalent to 25 per cent of the expected revenues of emissions trading for building and road transport fuels. It will provide 72.2 billion euros of funding to Member States, for the period 2025-2032, based on a targeted amendment to the Multiannual Financial Framework (MFF). With a proposal to draw on matching Member State funding, the Fund would mobilise 144.4 billion euros for a socially fair transition.

“The Climate Action Social Fund mostly aims at covering at least part of the costs of the transition: it complements the proposal to extend the ETS to buildings and transports,” reacts Monica Frassoni, President of the European Alliance to Save Energy (EU-ASE).

However, she said to not be totally convinced of either of these proposals, even if she fully shares their objectives. 

“On the Fund, I am afraid that this potentially important facility will not be able to fully reach its goal because its size is too limited and it uses only partially ETS revenues (25 per cent),” she tells CEENERGYNEWS. “It also needs a high level of national co-financing (50 per cent) and unanimity to be made operational.”

Specifically, the Social Climate Fund aims to support households, transport users and micro-enterprises through the implementation of three policies: first, the Energy Taxation Directive, which offers possibilities for exempting vulnerable households from higher energy taxes. Second, the Energy Efficiency Directive and Renewable Energy Directive will stimulate energy savings that, in turn, can alleviate energy poverty. Finally, the Alternative Fuels Infrastructure Regulation will ensure that charging and refuelling infrastructure for zero-emission vehicles will reach all parts of Europe. 

“The Fund does not explicitly focus on the most vulnerable,” underlines Mrs Frassoni. “Finally, there are also some risks of under-use it because of difficulties of access, notably for Energy Efficiency projects.”

“The extension of the ETS to transport and heating fuels does not seem the most cost-effective and timely instrument to reduce emissions and ensure citizens comfort, in comparison to other policy options, like switching to renewables and deep renovations.”

Concerns on implementation at national levels

Also, Croatia’s Society for Sustainable Development Design (DOOR) believes that the Fund lacks in ambition and its Executive Director Miljenka Kuhar expresses concerns when it comes to implementation at the national level.

“We all welcome this shift in EU public policy but that there are two points for scepticism,” she tells CEENERGYNEWS. “First, this 55 per cent emission reduction comes too late and at this point, it is not ambitious enough and the second point the implementation on a national level could be more than problematic.”

“If you take for example Croatian targets, they are set on the bare minimum and scenarios presented both in NECP and NLTS are showing that Croatia will not be able to achieve climate neutrality even if following the most ambitiously set scenario.”

Also regarding the Social Climate Fund, Mrs Kuhar is very sceptical about the implementation part, stressing that the poverty rate on the EU level is on the rise: in 2019, according to Eurostat data, 20.9 per cent of the EU population, were at risk of poverty or social exclusion. Now more than ever, climate change is among those factors causing poverty and Mrs Kuhar mentions the recent heat waves and floods as great examples of serious effects climate changes can have on our society.

“Part of EU Member States still do not have a definition of energy poverty or vulnerable citizens,” she points out. “The data collection and metric on energy poverty or vulnerable citizens are still not put in place in many Member States. Also, at least in Croatia bureaucratic procedures are overly complex and delayed absorption are posing serious threats – citizens who need the help the most often cannot get it due to the bureaucracy.”

Therefore, she thinks that even though the EU is announcing that access to funds in procedures will be simplified for the 2021-2017 period, it still remains to be seen if that will be the case.

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