In the end, everyone should benefit from climate protection. Charging an electric car with wind power from the North Sea is much cheaper than filling it up with diesel from Saudi Arabia. Heat pumps and insulated walls will lower most citizens’ heating bills. But until that happens, climate protection will be a burden.
Precisely because of the high gas prices, the social component of the EU climate protection package, which is intended to help precisely these people, is now also at risk. It’s about the “Climate Social Fund”. It should be financed with taxes that make gas even more expensive. More precisely: with a new emissions trading scheme for buildings and transport, analogous to emissions trading in industry.
The EU states are to invest three quarters of the income in climate protection. A quarter goes to the EU and is returned via the social fund and the federal states. That should be 72 billion euros within eight years. A distribution key ensures that a particularly large amount of money is distributed to those countries in which the population is particularly affected – i.e. to where people have less money and where the rise in prices has a particularly strong impact. The new emissions trading and the social fund therefore belong together. The idea is that the money from the levies flows through the fund to those who are particularly burdened.
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But does it work out? “The budget of around 72 billion euros is far too tight. That is not enough to socially cushion the consequences of CO2 pricing and at the same time to invest in a climate-friendly economy, ”says DGB board member Stefan Körzell. And an analysis by the Delors Institute warns: “The Climate Social Fund in its current form will not be sufficient to mitigate the negative and unjust effects of the new emissions trading on Europeans, which leads to a high risk of social unrest.”
The social fund is extremely important politically
The fear of such unrest also explains the current reactions to the high gas prices: as if in a panic, EU countries are capping prices, suspending taxes and paying money so that citizens can still pay their gas bills. A new emissions trading scheme appears to some to be out of date. His opponents include French President Emmanuel Macron, Hungarian Prime Minister Viktor Orban and the Green Group in the European Parliament.
The EU Commission knows how important the social component of climate protection is. Frans Timmermans, the responsible Vice President in the EU Commission, keeps saying: “The Green Deal will be fair or it will not be at all.”
The social fund is also extremely important politically. Its aim is to make the climate protection package attractive to those countries that feel disadvantaged by other elements of the package. After all, each of the measures burdens the EU member states differently. For example, the conversion will be particularly expensive where a lot of coal has been burned up to now.
The fact that Timmermans wants to finance the social fund through a new emissions trading scheme could now turn out to be a design flaw. Should the new emissions trading fail, the entire climate package would be in danger. At the very least, it would be difficult to find a replacement for the funding.
The Delors Institute suggests using revenues from the old emissions trading for industry instead of those from the new emissions trading for buildings and transport. “Without the new emissions trading scheme, the Climate Social Fund would send a strong signal for a just transition,” writes the author of the analysis.
The CDU MP Peter Liese defends the proposals for emissions trading and the social fund: “With the social fund, citizens would see where the money that they pay arrives. If it is really paid out to those in need, the acceptance of emissions trading also increases. “There are hardly any alternatives to this emissions trading if carbon dioxide emissions are to be reduced:” We need incentives so that citizens invest in clean cars and heating systems. “
This is how redistribution works
Should the Social Fund survive in spite of everything, there is another problem. In order for the states to get the money, they have to submit plans to the EU Commission and have them approved. These plans must include grants for the energetic renovation of buildings and for low-emission mobility, i.e. electric cars. It is also possible to pay out money directly to poor households. The states have to finance half of all measures themselves. This would bring together 144 billion euros over eight years.
It is no coincidence that the principle is reminiscent of the Corona reconstruction fund. There, too, the states first have to say exactly what they are doing with the money before they can get it. One condition is that they prevent corruption and conflicts of interest. Not all states have yet been able to make this credible, which is why Poland and Hungary in particular have not yet received any money.
It seems rather unlikely that they will agree to a new redistribution, from which they will not get anything in the end.
More: “Climate neutrality cannot be induced” – experts call for a radical change in direction in climate policy.