Social Climate Fund. How to protect householdsfrom rising energy prices?

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.