Social Climate Fund

The key target of the EU’s Social Climate Fund is to support vulnerable EU citizens and enterprises when emissions trading is extended to also apply to road transport and individual heating of buildings starting in 2027 (ETS2). A particular focus will be on providing funding for vulnerable households, micro-enterprises and road transport users.

The aim of the measures and investments is to improve the energy efficiency of buildings, reduce carbon dioxide emissions from the heating and cooling of buildings and improve the access to zero- and low-emission mobility and transport.

When will the Social Climate Fund be in use?

The Social Climate Fund was created in connection with the extension of the EU emissions trading system (ETS2) that concerns fuel emissions from buildings and road transport.

The Regulation establishing the Social Climate Fund was adopted and entered into force in 2023. The Fund will be in use in 2026–2032.

How will a Member State get funding?

The funding will be granted on the basis of the Social Climate Plan drawn up by the Member States that will specify the climate actions to be taken.

The preparation of the plan is led by the Ministry of the Environment, together with the Ministry of Transport and Communications and other ministries.

How will the Member States’ plans be evaluated?

The Member States must take the criteria of the EU legislation and climate targets into account in their plans. The most important criteria are:

• Energy efficiency
• Building renovations
• Zero- and low-emission mobility and transport
• Reducing greenhouse gas emissions
• Reducing the number of vulnerable households, especially households facing energy poverty, vulnerable micro-enterprises and vulnerable transport users.

How much funding is offered?

The overall amount of the Social Climate Fund is EUR 86.7 billion to be allocated between 2026 and 2032. The Fund is connected to the extension of the EU emissions trading system (ETS2), and it will be financed by revenue generated from the system. Besides this, the Member States must contribute at least 25% of the estimated total costs. The Member States must include in the plans the measures and investments to be financed, the estimated costs of the measures and investments, and the national contribution. When submitting their plans, Member States must present the estimated total costs excluding the value added tax (VAT) to enable comparability between the plans. The plans must also include key milestones and targets so that the effective implementation of the measures and investments can be assessed.

The maximum amount available to Finland from the Fund in 2026–2032 is EUR 464 million, which also includes the national contribution.

How was the plan prepared and where do we stand now?

The process to finalise the plan is under way. The plan should be ready to be submitted to the Commission by the end of 2026. A broad spectrum of stakeholders has been heard during the process, and a public consultation will be organised before the plan is submitted to the Commission.