A ‘climate shield’ is on its way to bring social justice to Brussels’ energy transition policies: it will be a financial fund to help the most vulnerable not to be overwhelmed by price increases and transition costs caused by the ecological transition shock.

Avoiding the increase of energy poverty, giving support to those who are most vulnerable in the face of rising prices, goods and fuel, driven upwards by carbon tax and ETS values are the objectives that the European Union wants to achieve with the creation of a “climate shield”. This social climate fund is similar to other instruments that have long been in Brussels’ toolbox, but are increasingly necessary as the European climate agenda accelerates.

Frans Timmermans, the Commission vice-president in charge of climate policy, announced a maxi-package of climate measures on 14 July. The package of measures should include the reform of the ETS, adding heating of buildings and road transport to the European carbon market. But also the carbon border tax (CBAM), which would coexist with the ETS at least for a period and would have a direct and immediate impact on the prices of foreign imports.

So Brussels is thinking of channelling the proceeds of the ETS (which is growing, with the boom in carbon prices now stable at over €50/tCO2) and possibly funds from other sources – such as the parallel ETS for buildings and transport – to citizens, to help them switch to more sustainable alternatives. We are talking here about domestic heating systems that have less impact on the environment, but also the purchase of electric vehicles, Timmermans mentioned. A circular mechanism, “closed” by the social fund for the climate, which helps to avoid burdening the costs of energy transition on those who are already in difficulty.

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