For a truly just green transition, we need funding for structural changes not subsidies

At a time when the European Green Deal is moving from one major challenge to another, the question of whether the green transition can be achieved in a just way and without excessive costs for households becomes particularly relevant.

In an InsideStory and MacroPolis article, Nikos Mantzaris answers this question positively, presenting social justice-oriented solutions that focus on funding projects that prioritize vulnerable citizens.

After recounting the successive crises that the Green Deal has experienced, he focuses on the future challenge of the new Emissions Trading System (ETS-2).

From 2027, ETS-2 will set a price in exchange terms for each ton of carbon dioxide emitted from the use of fossil fuels in buildings and road transport. This cost will be paid by fossil fuel suppliers, who in turn will pass it on to consumers.

The introduction of this system was necessary as, according to Eurostat data compiled by Green Tank, both the EU-27 and – even worse – Greece have performed poorly in reducing the carbon footprint of these sectors. At the same time, the available data on electricity production show that the existing ETS-1 has been effective in reducing emissions from this sector.

To mitigate the social impacts of the implementation of ETS-2, EU-27 countries will have funding resources available from the new Social Climate Fund, as well as from the auctioning of emission allowances in ETS-1.

According to Nikos Mantzaris, the best way to allocate these resources is not a subsidy policy similar to that of the energy crisis, which perpetuates the dependence of households and businesses on fossil fuels.

Instead, as a recent analysis by Green Tank and Facets has shown, priority should be given to investments in energy upgrades – especially for vulnerable citizens – and behavioral changes.

This is the only way to achieve a simultaneous reduction in the carbon footprint and household energy bills.

The article was published in Inside Story (Greek) and MacroPolis (English) on 23 April 2024 and was implemented with the support of the Embassy of the Netherlands in Athens, as part of a climate journalism project.

You can read it in the links below: