Will the Social Climate Fund suffice to shield citizens in the face of the new Emissions Trading System for the buildings and the road transportation sectors?

Nikos Mantzaris participated in the round table discussion titled “Financing the Just Transition: From ETS2 to the Social Climate Fund” together with the MEP of the Left Petros Kokkalis and the Professor of European Law & Energy Law of the University Piraeus Nikos Farantouris. The round table discussion was part of the workshop “Economic challenges of the energy transition in Greece & Europe” organized by the ENA Institute for Alternative Policies.

In his presentation, Nikos Mantzaris explained the reasoning that led to the creation of a second, distinct emissions trading system specifically for the road transport and buildings sectors (ETS-2). More specifically, he referred to evidence documenting the success of the existing trading system (ETS-1) in reducing greenhouse gas emissions in the power sector and the failure of the previous legislation (Effort Sharing Regulation) to achieve the same for the buildings sector and road transport, whose emissions remain stagnant and, in some cases, exhibit increasing trends.

In response to a question from coordinator Irini Ntai regarding whether the distribution of the resources of the Social Fund for Climate, which aims to mitigate the effects of the implementation of the ETS-2 among the EU-27 member states, is fair or not, he first commented that fairness in the distribution of resources in the EU-27 should not be taken for granted as the case of the European Just Transition Fund demonstrates. However, the criteria chosen by the EU for the allocation of the Social Climate Fund, as well as the way in which the Member States contribute to the collection of the €86.7 billion of the SCF’s resources, are in accordance with the “polluter pays” principle and take into account the very different economic realities in the EU-27 Member States. As a result, Bulgaria, Romania and Greece will have the highest net revenues, while the Netherlands, Luxembourg and Germany will have the highest net expenses.

The critical parameters that will determine the success and fairness (or otherwise) of the new policies are the adequacy of resources in conjunction with their uses. At this point, Nikos Mantzaris gave the example of subsidies – direct or indirect – for the consumption of fossil fuels that were given during the energy crisis, which on the one hand did help citizens temporarily, but, on the other hand, without contributing to their permanent shielding from future energy crises. He stressed that if the same logic is applied in the case of the Social Climate Fund, then there is no way that the €4.5 billion that Greece will receive for the period 2026-2032 will be sufficient to deal with the additional cost, the implementation of ETS-2 will demand from the citizens.

For this reason, Nikos Mantzaris characterized as crucial to channel financial resources (and not only from the SCF) for projects which permanently reduce the carbon footprint of households, such as energy upgrades, heat pumps, renewables to cover the households’ electricity needs, electromobility, or increasing the use of public transportation. Since fossil fuels are at the root of the problem that leads to the increase in energy costs, financing such projects will also lead to the permanent economic relief for the most vulnerable social groups, which is also the main political issue.

The workshop was held on December 12, 2023. The discussion followed an opening presentation by Anastasia Skapoula, ENA Institute, on ETS 2 and the Social Climate Fund.

The discussion was moderated by Eirini Ntai, Social Analysis Group Coordinator, ENA Institute.

You can watch the placement of Nikos Mantzaris in our YouTube channel (in Greek).

You can also watch the entire roundtable discussion on ENA’s Institute of Alternative Policies YouTube channel (in Greek).