More than EUR 85 billion from the European Union’s Social Climate Fund remains unused, as member states are late in submitting their social climate plans. The deadline expired on 30 June last year, but so far only eight countries have submitted them. A group of civil society organisations has warned that further delays jeopardize a socially just energy transition.
Sweden and Lithuania are the only two member states that have received approval from the European Commission and formally adopted their social climate plans. This makes them eligible to receive disbursements from the Social Climate Fund.
The EU established it in 2023 to help vulnerable households, microenterprises and transport users cope with the costs that will arise from the introduction of the emissions trading system known as ETS2, for buildings and road transport.
ETS2 aims to encourage the shift to climate-friendly technologies such as electric vehicles and heat pumps, and is scheduled to become fully operational on 1 January 2028. From 2026 to 2032, the Social Climate Fund and national governments are required to provide EUR 86.7 billion to mitigate the impact of this mechanism for pricing greenhouse gas emissions.
The funding is intended to support measures such as building renovation, clean heating and cooling, access to low- and zero-emission vehicles, and sustainable mobility.
Over 41 million people across Europe cannot afford to keep their homes adequately warm
Carbon Market Watch calculated that these funds are insufficient, noting that over 41 million people across Europe cannot afford to keep their homes adequately warm. In addition, millions of people live in residential buildings or work in buildings that do not protect them from extreme heat.
Although the deadline for submitting draft national social climate plans to the European Commission for approval expired on June 30 last year, only eight countries sent in their drafts so far. In addition to Sweden and Lithuania, the group comprises Slovenia, the Netherlands, Malta, Latvia, Greece and Croatia. As much as EUR 85.3 billion remains unallocated.
Due to the missed deadline, a group of organisations, including CEE Bankwatch Network, Carbon Market Watch, the European Environmental Bureau, Climate Action Network Europe, REScoop.eu, the Cool Heating Coalition, FEANTSA, and the LIFE Effect project, have called on national decision makers to act without further delay.
A public petition has also been launched, allowing citizens to tell decision makers that a just transition cannot wait.
Households in Eastern Europe spend twice as much of their income on energy
Due to the ageing and energy-inefficient housing stock, much of which dates back to the Soviet era, as well as outdated or inadequate public transport infrastructure, long-term investment is particularly important for countries in Central and Eastern Europe.
Households in Eastern Europe spend twice as much of their income on energy as households in Western Europe, CEE Bankwatch Network said.
The development of social climate plans remains opaque, under-resourced or politically deprioritised
CEE Bankwatch Network has been monitoring the development of social climate plans in EU member states in Central and Eastern Europe. Last June, it published an analysis highlighting limited transparency, insufficient civil society inclusion, significant data gaps and slow administrative progress in the preparation of national social climate plans.
“In many capitals, the preparation of social climate plans remains opaque, under‑resourced or politically deprioritised,” CEE Bankwatch Network said.
The organisation also noted that many governments have failed to conduct meaningful public consultations, despite the legal requirement for social climate plans to be inclusive and evidence-based, while some have called for ETS2 to be postponed altogether.
“However, postponing the mechanism would undermine both climate progress and social cohesion. Instead of delaying action, policymakers should ensure that robust support frameworks are properly in place. As Europe moves closer to 2028, the window for delivering a socially just transition is rapidly closing,” CEE Bankwatch Network concluded.
