With just weeks until EU member states must submit their national Social Climate Plans, a new report from leading European local networks says that most national governments are not properly consulting local and regional authorities – despite clear provisions in the EU Social Climate Fund regulations.
The Social Climate Fund, designed to mitigate the social impacts of the new Emissions Trading System (ETS2) on vulnerable households, is a key instrument to support the EU’s decarbonisation efforts. Between 2026 and 2032, the Fund will provide €86 billion for energy efficiency upgrades, sustainable mobility, and temporary income support.
The new report from the Local Alliance – a coalition comprising ACR+, CEMR, Climate Alliance, Energy Cities, Eurocities, FEDARENE, ICLEI Europe and POLIS – is based on a survey the Alliance carried out between April and May 2025 across 14 EU countries.
The survey finds that national governments are falling short of the Fund’s governance requirements, particularly the obligation to consult and coordinate with local authorities and align national plans with existing local strategies. In many cases, consultation has been weak, last-minute, or entirely absent.
In response, the Local Alliance report is calling on national and EU leaders to treat local governments as essential partners in the planning, implementation and evaluation of the Social Climate Fund.
“The Social Climate Fund must be a powerful instrument to address energy and transport poverty while accelerating the clean energy transition. Its success depends on targeted and localised implementation, because the transition happens first and foremost at the local level,” says Masha Smirnova, Head of Governance and Just Transition at Eurocities.
“National governments must meaningfully involve cities in both the co-design and implementation of the Fund to ensure that measures genuinely benefit vulnerable and low-income groups, are additional, and are not being used to close gaps in national budgets.”
Top-down planning is failing
The report paints a stark picture of how Social Climate Plans are being prepared across Europe. While some governments have opened space for local involvement, others have side-lined it completely.
This mirrors shortcomings seen with the EU Recovery and Resilience Facility, where a lack of partnership led to missed opportunities, poor territorial targeting and limited public trust.
Ignoring the role of local authorities in designing and delivering climate and social measures risks repeating those same mistakes – and ultimately failing to support the communities most in need.
Cities know what works
From debt relief schemes and housing renovation grants to mobility support and local energy advice services, cities across Europe are already delivering practical solutions to energy and transport poverty. Their knowledge of local needs and capacity to target support are vital to the success of the Social Climate Fund.
Yet energy and transport poverty continue to rise, especially in rural and peri-urban areas where infrastructure is limited and costs remain high. By excluding local governments from the Fund’s design, national plans risk falling short of their own goals and missing the opportunity to deliver lasting, place-based impact.
Unmet obligations
The Social Climate Fund regulation clearly requires member states to consult local and regional authorities during both planning and implementation. However, the Local Alliance survey reveals widespread failure to uphold this obligation.
Despite repeated encouragement from the European Commission, suggestions from cities and regions have not systematically been included in final national plans.
Local authorities were often informed too late to meaningfully shape national plans, or were asked to provide input without being given access to draft documents or clear timelines. This lack of involvement jeopardises the development of targeted, realistic and publicly supported policies.
In Sweden, key decisions were made before municipalities were even consulted. In Greece and Luxembourg, engagement came too late to shape content or lacked access to draft plans. In many countries, consultation was limited to generic online forms with no clear process for integrating local feedback.
Still time to change course
Despite these shortcomings, there is still time for governments to make meaningful adjustments before finalising their national Social Climate Plans. The Local Alliance urges member states to urgently establish formal, structured mechanisms for the involvement of local and regional authorities across all phases, from planning and governance to delivery and evaluation.
Local governments must be represented in Social Climate Fund monitoring committees, where they can contribute to tracking outcomes and adapting measures based on real local needs.
To maximise impact, Social Climate Fund measures must be aligned with existing local strategies such as Sustainable Energy and Climate Action Plans (SECAPs) and Sustainable Urban Mobility Plans (SUMPs), as well as with lessons learned from successful locally led initiatives.
The report also highlights the urgent need for all member states to complete transposition of ETS2, the mechanism that underpins the Fund, and to invest additional ETS2 revenues into long-term climate and social measures.
A long-term perspective is essential. The Fund should prioritise structural investments that address the root causes of energy and transport poverty, such as building renovation, mobility infrastructure and community energy, rather than relying on short-term income support.
Targeting must be improved by using locally collected, territorially disaggregated data, and by tapping into established data frameworks like the Covenant of Mayors. Crucially, a share of the Social Climate Fund should be allocated directly to local and regional authorities. Supporting municipalities with adequate resources will accelerate delivery.
A warning for the future EU budget
This second Local Alliance report builds on an earlier briefing from the Alliance in December 2024, which warned that without strong partnership principles, national Social Climate Plans would fall short. That warning is now coming to fruition.
The Social Climate Fund process must serve as a wake-up call for the EU’s next seven-year budget (2028–2034). As has been repeatedly shown, when local governments are left out, EU investment fails to deliver its full potential.
The future EU budget must embed multilevel governance across all funding instruments. Reforms and investments should be co-designed with cities and regions from the start.
A more inclusive and territorially responsive approach is not just a governance principle, it is the only way to deliver just, effective and lasting outcomes for people across Europe.
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The survey and report have been produced by the Local Alliance, a coalition of local and regional governments made of ACR+, CEMR, Climate Alliance, Energy Cities, Eurocities, FEDARENE, ICLEI Europe and POLIS . This is an informal coalition aiming at ensuring cities and regions have the competencies and resources to implement the European Green Deal and reinforce Europe’s resiliency.
You can read the full report: Local Governments still left out of national Social Climate Plans
