The European Investment Bank (EIB) has approved a €3bn Frontloading Facility which provides revenues to countries to spend on preparing citizens for higher fuel costs, once the EU’s carbon price on heating and fuel (ETS2) kicks in. More money could be made available next year. Governments should use this opportunity to transition Europe’s households away from imported fossil fuels, says T&E.
Federico Terreni, climate policy manager at T&E, said: “ETS2 can encourage the switch from dirty fuels to cleaner alternatives, but it risks becoming controversial if the introduction is not managed smoothly. Governments can use ETS2 revenues to shield citizens from increased costs and to invest in greener alternatives. But the revenues will not be ready immediately. This is where the frontloading facility comes in.”
The ETS2 will be introduced in 2028, following a one-year delay that was agreed by the Council and the European Parliament late last November during the negotiations on the 2040 EU climate target.
Delaying ETS2 by one year would lead to less revenues, reducing the resources available for the Social Climate Fund (SCF) directed to vulnerable groups for 2027. For this reason, both the Frontloading Facility and the upcoming review of the Auctioning Regulation are even more important to ensure early investments in green solutions.
The EIB’s decision now accelerates financing for green schemes such as EV social leasing and improved public transport. The facility allows governments to put in place redistribution measures for the poorest households, says T&E. “It is now over to member states to take this multi-billion euro opportunity to transition Europe’s households away from imported fossil fuels,” says Federico Terreni.
This facility is only available for Member States who have transposed ETS2 into national law. Belgium, Czechia, Estonia, France, Hungary, Poland, Portugal, Romania, Slovakia, Spain are yet to transpose it.
ENDS
Note to editors
Tomorrow at 11:00 CET, MEPs from across the political spectrum will come together for a webinar to discuss the importance of frontloading. You can join webinar here.
