The Social Climate Fund is a new EU fund that will help make the green transition fair and inclusive.
It will support vulnerable people and small businesses who are most affected by rising energy and transport costs as Europe moves towards climate neutrality.
The fund aims to ensure that no one is left behind in the transition to a low-carbon economy.
Did you know?
88% of Europeans support a green transition that leaves no one behind
9 in 10 Europeans support financial help for vulnerable households to make their homes more energy efficient
In 2023, more than 1 in 10 people in Europe could not keep their home warm
46% believe sustainable energy and services will be affordable for all by 2050
Why a new fund?
To meet the EU’s goal of climate neutrality by 2050, a new Emissions Trading System (ETS2) will be introduced in 2027. This system will put a price on carbon emissions from buildings, road transport and small industries. While this is crucial for reducing emissions, it may affect energy and fuel prices.
The Social Climate Fund is designed to cushion the impact on those who may struggle the most. It will start operating in 2026, so that support reaches people even before the effects of ETS2 become a reality.
Details
Who will benefit?The Social Climate Fund will support people and very small businesses across the EU, with a focus on:
- households that struggle to keep their homes warm
- people who cannot afford the transport they need
- small family-run businesses and micro-enterprises with high energy or fuel transport costs
More support will be available in EU countries where incomes are lower and energy or transport poverty is more widespread.
How much funding is available?From 2026 to 2032, the Social Climate Fund will provide €86.7 billion. It will be financed through the ETS2 and contributions from EU countries.
What will the Fund pay for?The Social Climate Fund can finance investments and measures for:
- greener homes
- renovating buildings to improve insulation and energy-efficiency
- replacing outdated heating, cooling and cooking systems with cleaner options
- installing renewable energy sources in buildings, like solar panels
- greener transport
- improving access to zero-emission transport, like electric public transport and shared mobility
- temporary income support
- direct financial help for those who need it most
- greener homes
How do EU countries get the funding?To receive funding, each EU country must submit a National Plan to the Commission by 30 June 2025.
The Plan must set out the measures planned between 2026 and 2032 by each EU country to support those most affected by the green transition.
The Commission will assess each plan and release funding once key milestones and targets set for each measure are met.
Timeline at a glance
- June 2025
EU countries submit their national plans
- Q1/Q2 2026
Commission adopts national plans
- 2026
First payments to EU countries
- 2027
ETS2 starts operating
- 2032
Social Climate Fund ends in December
What is ETS2?
The new EU Emissions Trading System (ETS2) is part of the European Green Deal. It puts a price on carbon emissions from:
- buildings (like homes and offices)
- road transport (like cars, trucks and delivery vans)
- small industries
It will encourage cleaner energy use, help EU countries reduce their carbon emissions and reach EU’s climate neutrality by 2050.
ETS2 will start in 2027, one year after the Social Climate Fund begins providing support.
