Funding mechanisms under the revised EU ETS and Social Climate Fund

Funding mechanisms under the revised EU ETS and Social Climate Fund

The European Union Emissions Trading System (EU ETS) is one of the main pillars of EU’s climate and energy policy and its revision is crucial to the Fit for 55 Package, adopted by the European Commission (EC) in July 2021.

In this paper, ERCST and CEEP provide an overview of the size and functioning of the funding mechanisms which are part of the revised EU ETS and the Fit for 55 Package, i.e., the Social Climate Fund. It also puts forward some recommendations in light of the ongoing legislative process. Finally, it compares the ENVI draft report on the ETS funding mechanisms with the EC proposal providing a summary of the current and upcoming political debate.

The Environmental Council will meet on 28th June, aiming to achieve a Council position on the Fit for 55 Package, including the EU ETS Directive, while the European Parliament will vote its position in June. The beginning of trilogue negotiations between Parliament and Council under the supervision of the EC is envisaged for September.


Climate Policy Priorities for the Next European Commission