This information article draws on a policy proposal that presents ten measures for National Social Climate Plans (NSCPs). The NSCPs are to accompany carbon pricing in heating and transport (ETS2) and serve as proposals for social measures in the transition from fossil fuelsThey can be financed from ETS2 revenues, which are allocated to EU governments outside the Social Climate Fund. It is important to note that the views expressed in the original document are solely the opinions of its authors and do not necessarily reflect the views of the European Union or CINEA, which funded it.

Although NSCPs are often seen only as opportunities to spend carbon tax revenues, they are also presented three measures that support social and climate progress without fiscal costsBelow are the proposed measures divided into the renovation, heating and transport sectors:

• 1. Support for tenants and motivation for owners to insulate and change heating systems: It is proposed sharing the cost of carbon fees between owners and tenants (for example in Germany, where landlords cover up to 95% of the costs in inefficient buildings) and tying rent increases to the energy efficiency of the building (for example in Belgium). The aim is to protect vulnerable households and incentivise investment in renovation.
• 2. Setting deadlines for the sale of new fossil technologies: Clear dates for the end of sales of new technologies with long lifespans, such as gas boilers or combustion engines, can reduce the risk of investing in electrical alternatives, thereby reducing their costs for consumers.
• 3. Fossil fuel subsidy reform: Eliminating existing fossil fuel subsidies is a priority as they distort the ETS2 price signal and waste resources. The funds could be used to reduction of taxes, fees and non-energy charges for electricity, or financing other social climate programs.
• 4. Support for renewable sources for vulnerable households: Local projects like the Italian program Reddito Energetico, which installs free solar panels for low-income households, can significantly reduce their dependence on fossil energy. Access to energy communities for vulnerable households is also important.
• 5. Reducing the (visible) price of electrified transport: French program may help reduce higher upfront costs of electric vehicles (EVs) Social leasing, which showed how it benefits vulnerable households. The second way is to support public transport, as shown German Deutschlandticket, which has the potential to reduce the number of car trips.
• 6. Reducing the (visible) price of electrified heating: The Social Climate Fund can provide 100 % reimbursement of initial costs for heat pumps for vulnerable households in the form of grants or interest-free loans. Operating costs can also be reduced by lower VAT on heat pumps or by reducing electricity prices for them.
• 7. Initial subsidies for building renovation: Italian program Superbonus, which transformed a tax credit into a specific start-up subsidy, has been very successful in activating investments for low-income households. Models like Community Land Trusts (CLT) can ensure that subsidized renovations do not impact housing affordability.
• 8. Training of heating installers and construction workers: To cover the need for skilled workers in the field of insulation and replacement of heating systems, EU governments should set up modular, dynamic professional coursesAn example is the program RenewAcad in Romania, which trains current and former miners in the installation of renewable energy sources.
• 9. District heating planning and regulation: Identification and expansion of systems district heating in areas with vulnerable households can decarbonize buildings on a large scale. Denmark, where almost two-thirds of households are connected, plans to run 100% on renewables by 2030.
• 10. Direct payments to households: Direct payments provide immediate assistance and a degree of insurance against high ETS2 pricesThey represent a particularly transparent use of revenues and can account for up to 37.5% of the Social Climate Plan budget.

These measures serve as key tools to ensure a just and socially sensitive transformation towards a decarbonized economy, protecting vulnerable households while meeting climate goals. Spring

Glossary of key terms

• Carbon Pricing: A mechanism that attaches a monetary value to carbon emissions, typically through a carbon tax or emissions trading scheme, to discourage activities with a high carbon footprint.
• ETS2 (Emissions Trading System 2): The extension of the European Emissions Trading System to the buildings and transport sectors, which places a price on carbon emissions in these areas.
• National Social Climate Plans (NSCPs): Plans proposed by EU Member States to implement social measures that accompany and mitigate the impacts of carbon pricing, in particular in relation to the transition away from fossil fuels.
• Social Climate Fund (SCF): An EU fund designed to support Member States in mitigating the social impacts of carbon pricing on vulnerable households and micro-enterprises.
• Renovation: The process of modernizing and improving existing buildings, often aimed at increasing energy efficiency through insulation, window replacement, and other modifications.
• Electrified Transport: Transportation that uses electricity instead of fossil fuels, particularly through electric vehicles (EVs) or electric trains/public transportation.
• Electrified Heating: Heating that uses electricity instead of burning fossil fuels, typically through heat pumps or electric heaters.
• Heat Pumps: Devices that transfer heat from one place to another are used to both heat and cool buildings, and are significantly more energy efficient than traditional heating systems.
• Low-income households/Vulnerable households: Households that are economically disadvantaged and are particularly vulnerable to the adverse impacts of rising energy prices or environmental policies.
• Fiscal Cost: Costs that directly burden public finances or the state budget.
• No Fiscal Cost: Measures that do not require direct government spending but instead work through regulation or changes to market mechanisms.
• Subsidies: Financial assistance or support provided by the government to individuals or businesses to reduce the cost of certain goods or services (e.g., renovation subsidies, solar panel subsidies).
• Direct Payments: Cash transfers directly to households, often as a form of compensation for increased costs (e.g. due to carbon pricing).
• Building Renovation: Extensive improvements to buildings to increase their energy efficiency and reduce emissions.
• Energy Poverty: A situation where a household cannot afford to adequately heat or cool their home at a reasonable cost.
• Community Land Trusts (CLTs): Non-profit organizations that own land and rent it to people who build homes on it, with the aim of ensuring housing affordability and preventing real estate speculation.
• District Heating: A system that delivers heat from a central source (or sources) through a network of pipes to multiple buildings.
• Renewable energy sources (Renewables): Energy sources that are naturally replenished, such as solar, wind or geothermal energy.