{"id":36577,"date":"2025-07-06T15:30:42","date_gmt":"2025-07-06T13:30:42","guid":{"rendered":"https:\/\/www.co2news.sk\/?p=36577"},"modified":"2025-07-06T15:34:39","modified_gmt":"2025-07-06T13:34:39","slug":"ets2-how-can-emissions-trading-help-vulnerable-households-in-the-eu","status":"publish","type":"post","link":"https:\/\/www.co2news.sk\/en\/2025\/07\/06\/ets2-how-can-emissions-trading-help-vulnerable-households-in-the-eu\/","title":{"rendered":"ETS2: How emissions trading can help vulnerable households in the EU"},"content":{"rendered":"

New ETS2<\/strong> introduces emissions trading for fuel combustion in buildings and transport from 2027. Fuel operators will have to buy emission allowances at auctions, which is likely to will result in higher heating and fuel prices. The EU requires that part of the proceeds from these auctions go to support for vulnerable households and micro-enterprises<\/strong> under the new Social-Climate Fund. As the European Parliament points out, the emerging carbon tax usually more expensive<\/em> energy for consumers, and therefore the funds raised should be used to mitigate the impacts on households. ETS2 is intended to achieve a reduction in emissions in the affected sectors of ~42 % by 2030 compared to 2005, making it a key instrument of EU climate policy.<\/p>\n

The potential for massive income for social justice<\/h5>\n

ETS2 could generate hundreds of billions of euros<\/strong> across the EU. Analyses estimate that between 2026\u20132032, almost \u20ac300 billion<\/strong>, at a carbon price of around \u20ac75\/t CO\u2082 to ~\u20ac344.5 billion<\/strong>This amount completely exceeds the resources of the Social-Climate Fund (SCF), which has a total allocation of ~\u20ac65 billion for the years 2026\u20132032. Slovakia's maximum share of the SCF is only ~\u20ac1.53 billion (plus at least \u20ac251.3 billion in state co-financing).<\/p>\n

The legislation defines the precise areas of use of these funds. Financial flows are to be directed mainly to measures that "contribute to the social aspects" of emissions trading. The key legal framework consists of: article 8<\/strong> SCF Regulation (support for vulnerable households and micro-enterprises), article 30<\/strong> ETS Directive (addressing social impacts for all households) and article 10<\/strong> ETS Directive (mandatory investments from ETS revenues including ETS2). Interestingly, funds from the existing ETS1 (industry) could in principle also be used to improve the social resilience of households to energy prices.<\/p>\n

Revenue uses and policy objectives<\/h5>\n

Profits from ETS2 can finance, for example:<\/p>\n

    \n
  • Investments in decarbonizing infrastructure:<\/strong> support for renewable sources, modernization of electrical networks, construction of charging stations and ecological public transport. According to the EC, the carbon price will be a direct motivation for the renovation of buildings and the development of low-carbon mobility.<\/li>\n
  • Direct assistance in the transition away from fossil fuels:<\/strong> subsidies for electric cars, or for converting boilers to biomass or heat pumps, expanding ecological means of transport and infrastructure (chargers, cycle paths, etc.), or free\/reimbursed public transport travel for hard-to-reach regions.<\/li>\n
  • Direct financial support to households:<\/strong> compensation of expenses for vulnerable families \u2013 e.g. climate dividend<\/strong> (cash bonus for emission allowances), one-off vouchers or contributions. Early direct support can immediately mitigate the effect of price increases until investment projects start. (Similarly, Austria will introduce a Klimabonus tour for citizens in hard-to-reach regions.)<\/li>\n
  • Educational and retraining programs:<\/strong> to professionally prepare workers from carbon industries for new green jobs (under the SCF, it is possible to specifically finance the education of vulnerable groups).<\/li>\n<\/ul>\n

    These measures also pursue several political objectives: reducing emissions, preserving household purchasing power (less dependence on fuels or increasing income), prioritizing the most vulnerable, implementing as quickly as possible, having a sustainable impact, being resilient to ETS2 price fluctuations (social measures should be volatility-resistant), and ensuring sufficient visibility of government actions to the public. For example, timely payment of contributions or toll zones for car traffic can quickly provide relief to affected households and are also clearly communicable to the public.<\/p>\n

    Specifics and challenges in Slovakia<\/h5>\n

    In Slovakia, the situation differs from the EU average:<\/p>\n

      \n
    • Energy poverty:<\/strong> According to statistics, 7 % households are unable to keep their homes warm, which represents ~120,900 households (approximately 438,700 people). Around 10 % households spend more than twice their median income on heating. These groups will be particularly sensitive to rising gas and heat prices.<\/li>\n
    • Transport vulnerability:<\/strong> More than 10% of Slovaks (approximately 518,700 people) are in transport poverty (they claim they have no alternative to a car or spend excessively on transport). The impact may be most pronounced in areas with poor transport accessibility. For example, modelling has shown that at a price of \u20ac60\/tCO\u2082, consumers in rural areas will pay on average ~\u20ac230\/year more, while in cities only ~\u20ac50\/year.<\/li>\n
    • Microenterprises:<\/strong> There are approximately 665,000 micro-enterprises (mainly sole proprietors and micro-firms) operating in Slovakia. We estimate that approximately 6% of them (~40,800 entrepreneurs) meet the \u201cvulnerability\u201d criteria (higher energy consumption and lack of funds for investment). These enterprises would also struggle with a competitive disadvantage in the event of a sudden increase in fuel prices.<\/li>\n
    • Financial resources:<\/strong> As SCF calculations indicate, Slovakia will receive only a fraction of the necessary package \u2013 its SCF allocation of ~\u20ac1.53 billion is only enough to partially cover the costs of compensation. The selection from ETS2 markets (EU ETS2 contribution) could, on the other hand, bring Slovakia several billion euros. However, the differences between urban and rural areas need to be taken into account when targeting aid: rural households have lower mobility and often worse energy efficiency, so their impact will be relatively higher.<\/li>\n
    • Energy inefficiency of buildings:<\/strong> Until two-thirds of single-family homes<\/strong> in Slovakia are estimated to be energy inefficient (e.g. uninsulated, old windows). This means that vulnerable households often live in energy-intensive homes, and if fuel prices rise, their heating costs can increase rapidly. Therefore, there is an urgent need to focus funding on energy efficiency in buildings.<\/li>\n<\/ul>\n
      Proposed measures for Slovakia<\/h5>\n

      For transport sector<\/strong> we propose, for example:<\/p>\n

        \n
      • Free and subsidized public transport for the vulnerable:<\/strong> 100 % discount for students from low-income families and 50 % discount for low-income families on regional public transport. This will mitigate the impact of rising fuel prices.<\/li>\n
      • Subsidies for environmentally friendly vehicles:<\/strong> State subsidies for the purchase of electric vehicles and the development of charging infrastructure for low-income groups (e.g. rural tradespeople).<\/li>\n
      • Social leasing and public service vehicles:<\/strong> Renting eco-friendly cars for social service providers (e.g. field caregivers) at a discounted price.<\/li>\n
      • Support for electromobility and shared transport services:<\/strong> Subsidies for the purchase of electric taxis or minibuses for public transport in the regions, contributions for the purchase of bicycles or trucks (e.g. cargo bicycles) for transporting children to school.<\/li>\n
      • Shared mobility initiatives:<\/strong> Cooperation with ride-sharing and carpooling companies with financial contributions for drivers in regions at risk of transport poverty.<\/li>\n
      • Information and education system:<\/strong> Creating information campaigns on ecological alternatives (car-sharing apps, community gas stations, or bike paths) and educational programs on digital mobility solutions. (These measures increase the visibility and effectiveness of government support.)<\/li>\n
      • Direct compensation for transport costs:<\/strong> One-off financial assistance (e.g. a grant similar to the Austrian Climate bonus<\/em>) for rural residents with limited access to transportation. Such assistance would offset increased fuel costs until more permanent transportation improvements are implemented.<\/li>\n<\/ul>\n

        IN housing sector<\/strong> (where a large part of the housing stock is uninsulated) the following measures are key:<\/p>\n

          \n
        • Comprehensive home renovation:<\/strong> Targeted renovations of vulnerable locations \u2013 for example, panel housing estates or older family houses, including insulation and replacement of installations. According to analyses, two-thirds of family houses have low energy efficiency, which means that investments in their improvement will bring significant savings and long-term mitigation of energy price increases.<\/li>\n
        • Support for rapid partial measures:<\/strong> Programs for minor improvements (e.g. window replacement, thermoregulation valves, efficient boilers or solar thermal panels). Even relatively simple measures can reduce consumption so that households do not experience up to 30% increase in gas or heat prices. The measures should be administratively simple and targeted at people with the lowest incomes.<\/li>\n
        • Assistance services:<\/strong> Establishing advisory centers (one-stop-shops) for households to help with subsidy applications or with the technical design of energy-saving solutions. State assistance teams<\/em> would visit vulnerable households and help them, for example, with insulation or installation of renewable energy sources.<\/li>\n
        • Community mediator training:<\/strong> Educational and awareness programs (e.g. training for energy advisors in municipalities) that provide information about available subsidies and financial mechanisms (such as climate loans or community loans).<\/li>\n
        • Support for renewable resources:<\/strong> Subsidies or preferential loans for the installation of a heat pump, photovoltaics or biomass boiler for low-income households. A similar principle is recommended by the ministries, so that part of the energy assistance funds are directed towards building renovation and renewable energy.<\/li>\n
        • Social guarantees:<\/strong> There must be a ban on unreasonable rent increases in state-funded renovations, so that improvements in housing quality do not drive lower-income groups out of their homes.<\/li>\n
        • Fee discounts:<\/strong> Vulnerable households could be exempted from project preparation fees, subsidy administration fees, or membership fees in energy communities. Targeted financial relief would temporarily increase their disposable income.<\/li>\n
        • Linking with existing programs:<\/strong> Renovation projects should be coordinated with the National Building Renovation Plan and European funds (OP Renovation, Green for Households, RES). The long-term strategy should build on the already developed renovation and energy saving schemes. (The funds from ETS2 will serve to maintain the investment pace even after 2026.)<\/li>\n<\/ul>\n

          Projects funded by ETS2 must not be just a short-term fix \u2013 they should permanently improve the living standards of the most vulnerable. Not only legislative changes are needed, but also political consensus<\/strong> and coordination between ministries. The aim must be to align ambitious climate targets with equally ambitious social measures for 2030, 2040 and 2050. While many governments postpone the social aspects of climate action, ETS2 offers an opportunity to embed social priorities directly into climate policy. With the right mix of subsidies and services, countries can protect consumers, address the specific needs of both rural and urban areas, and maintain public support for sustainable decarbonisation programmes. Spring<\/strong><\/em><\/p>\n

          Sources:<\/strong> The presented data and proposals are based on European analyses and Slovak projections of socio-climate plans.<\/p>","protected":false},"excerpt":{"rendered":"

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