The introduction of a new emissions trading system for buildings and road transport (ETS2), scheduled for 2028, will bring a new price signal for fossil fuels. To ensure that this does not disproportionately burden low-income families, the European Union established Social Climate Fund (SCF). This fund is to mobilise between 2026 and 2032 at least 86.7 billion euros (taking into account the mandatory 25 % national co-financing from Member States).

How does the EU allocation key work?

The distribution of funds between Member States is not governed by a simple rule of equal share per capita. On the contrary, the fund deliberately redirects a larger share of resources to countries with higher rates of energy poverty and lower fiscal capacity.

The formula for calculating the maximum financial share for individual countries takes into account six main indicators:

1. Total population.
2. Population at risk of poverty in rural areas.
3. Share of households at risk of poverty that have arrears on their energy bills.
4. Gross national income (GNI) per capita measured in purchasing power standards (PPS).
5. Total greenhouse gas emissions.
6. CO₂ emissions from fuel combustion in households.

Shares for selected countries and allocation for Slovakia

Of the total SCF financial package, countries with large populations or high levels of energy vulnerability will draw the largest share:

• Poland: 17,60 % (together with national co-financing, the contribution will amount to approximately 15.3 billion euros).
• France: 11,19 %.
• Italy: 10,81 %.
• Spain: 10,52 %.
• Romania: 9,25 % (the EU contribution itself represents 5.05 to 6.01 billion euros, which many times exceeds the country's current annual public spending on building renovation).

However, medium-sized and smaller countries in Central and Eastern Europe will also receive significant funds per capita:

• Hungary: 4,33 %.
• Czechia: 2,40 %.
• Slovakia: 2,35 % from the total fund.

Funding rules: Renovations instead of temporary subsidies

Regulation (EU) 2023/955 and in particular its Article 8 They set precise limits on what Member States can use the funds for:

1. Structural green investments (main priority): Finances must be directed primarily to deep renovations of buildings, reducing energy intensity, installing renewable energy sources (e.g. heat pumps or photovoltaics) and supporting affordable low-emission transport for vulnerable households and micro-farms. These measures permanently reduce consumption and energy bills.
2. Ceiling for direct income support (Article 8(2)): States can also use part of the funds to directly financially compensate vulnerable households for high energy prices. However, this support must be temporary, must decrease over time and its share is firmly capped at a maximum of 37.5 % of the total costs of the national Social and Climate Plan. The aim of this rule is to prevent short-term consumer aid from crowding out permanent structural investments in home renovation.

Call for national plans

The SCF funds represent a historic opportunity for Slovakia and other Member States to renovate the least energy-efficient buildings. The key to success will be the quality of national Social and Climate Plans and the ability of countries to accurately identify Intersection of the worst performing buildings with local poverty indicators, so that subsidies reach the people who need them most. JRi&CO2AI