EU split over climate fund to help most vulnerable

EU countries battled through the night to hash out the bloc's new measures to fight climate change, with negotiations focused on a "Social Climate Fund" for those most vulnerable in the green transition.

Late on Tuesday, environment ministers from the European Union's 27 member states adopted a common position on achieving zero-emission new cars by 2035, and on a special fund to help firms and consumers cover the cost of their climate efforts.

But the proposal for the Social Climate Fund (SCF) -- a key component of the plan presented by the European Commission in July 2021 -- was the subject of tense debate late into the night.

Establishing the special budget would help offset the impact of price increases for the bloc's most vulnerable households, and would also go towards housing and road transport measures that would reduce costs.

The subject is extremely sensitive for governments as inflation -- linked to energy prices -- is on the rise.

With divisions still deep, the 27 member states agreed on the plan in principle but remained at odds on the size of the fund.

Initially the fund aimed to provide over 72 billion euros in EU funding from 2025 to 2032.

But richer countries -- like the Netherlands and Germany -- want a smaller fund, with the spending targeted towards innovation, while Eastern European countries are pushing for a bigger budget to help cover the cost of going green.

- 'Unable to meet challenges' -

Berlin had initially proposed the allocation of 20 billion euros -- the smallest possible portion -- but finally on Tuesday raised it to 48 billion euros.

France, which holds the rotating presidency of the EU, rallied the majority of states to the amount of 59 billion euros for a shorter period (2027-2032), calling it a "fairly balanced compromise".

The agreement did not convince Poland, which denounced "decisions that risk undermining popular support for the climate plan", while Latvia voiced concerns about a fund "unable to meet the challenges faced".

Other issues, including a revamp of the EU's Emissions Trading System, were less contentious.

By the early hours of Wednesday, member states announced they had agreed to gradually eliminate the free emissions allowances granted to certain industrial sectors.

In return, companies would be protected by a carbon tax on imports from third countries at the EU borders, something known as the carbon border adjustment.

Free quotas allocated to airlines would be eliminated by 2027.

Member states also validated the inclusion of maritime transport in the carbon emission market, but with special exceptions for winter navigation, public service routes and services to small islands.

The bloc's ETS carbon market, in which companies must buy credits to emit CO2, is a cornerstone of the bloc's climate agenda.

Related Links
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