Europe is in the grip of energy price and energy security crises. Households are facing soaring energy bills and fear the coming winter, or simply cannot afford fuel to heat their homes. At the same time, Europe faces a climate emergency.
All of these crises are fossil fuel crises. As fossil fuel prices rise, household energy bills rise too, with a disproportionate impact, once again, on those in the most vulnerable situations, including the poorest. The response to the energy price crisis – and to the use of fossil fuels by Russia as a geopolitical tool – cannot lock Europe into new fossil fuels.
Yet the blame for high energy prices is falsely laid at the door of the policies that can help end them. Since the start of the war in Ukraine, various actors have called to suspend climate action, considering these policies costly. But climate policy goes hand in hand with energy security and affordability; by investing in clean, cheap and sovereign renewable energy sources, as well as boosting energy savings, we can address all three crises at once.
The EU has the tools to address these parallel social, climate and energy security crises, but it is failing to make the most of them. ETS revenues are higher than ever and yet analysis of revenue
use suggests that Member States are not using them to boost climate action spending. The ETS revenues totalled roughly €25 billion in 2021. Yet Member States regularly fail to spend even half of this annual revenue on climate action. This has happened to over half EU countries between 2013-2021, proposal for a Social Climate Fund (SCF) is a central and vitally important pillar to build the resilience of European citizens against future crises in the mid to long term. At the same time, the SCF will help to drive the achievement of Europe’s social and climate goals – but only if it is big and bold enough.
That’s why we are calling for:
- The revenues of the European carbon market (the ETS) to support the Social Climate Fund (SCF) budget. The SCF budget should scale in line with the carbon budget, so that households receive proportionate help in order to support investments that will help lower their exposure to rising energy prices
- Setting a minimum SCF budget at least to the level proposed by the European Commission (€72.2 billion over 8 years).
- Boosting the budget with solidarity contributions or funds derived from revenue caps on the industries reaping unexpected windfall profits generated by current high energy prices