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Social Climate Fund. How to protect households from rising energy prices?

Author

Listed:
  • Jakub SokoÅ‚owski
  • Joanna Mazurkiewicz

Abstract

The new carbon tax (ETS2) will increase the cost of heating with coal and gas starting in 2027. Rising energy prices raise concerns about a growing risk of energy poverty. The Social Climate Fund is intended to protect vulnerable households from excessive price increases. It will finance direct transfers and investments aimed at reducing energy consumption, such as thermal retrofits. We show that the risk of energy poverty will increase after the introduction of ETS2, even if thermal retrofitting investments are implemented. Therefore, direct transfers will be necessary. The budget of the Social Climate Fund will be sufficient to ensure that transfers protect low-income households from excessive energy price increases.

Suggested Citation

  • Jakub SokoÅ‚owski & Joanna Mazurkiewicz, 2025. "Social Climate Fund. How to protect households from rising energy prices?," IBS Policy Papers 02/2025, Instytut Badan Strukturalnych.
    • Handle: RePEc:ibt:ppaper:pp022025
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    File URL: https://ibs.org.pl/wp-content/uploads/2025/06/Policy_Paper_Spoleczny_Fundusz_Klimatyczny.pdf
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    More about this item

    Keywords

    Social Climate Fund; energy poverty; ETS2;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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