Energy Community Treaty

The Energy Community Treaty¹, signed in 2005, was established between the European Union and its Contracting Parties – Albania, Bosnia and Herzegovina, Georgia, Kosovo*, Moldova, Montenegro, North Macedonia, Serbia, Ukraine – to create an integrated market for electricity and natural gas.

The Energy Community Treaty is a living legal instrument, continuously shaped by decisions of the Ministerial Council², which can revise, expand, or replace both elements of the EU acquis and the organisation’s governance framework. This dynamic approach allows the Treaty to evolve in line with EU energy policy, market developments, and climate objectives.

In the WB6, the applicability of EU energy transition policies is grounded in the Energy Community Treaty, which provides the legal and institutional basis for progressive alignment with the EU energy acquis. Through its regulatory and institutional architecture, the Treaty promotes market integration, competition, and sustainability, requiring Contracting Parties to align with EU rules on energy markets, renewable energy, environmental protection, and competition policy.

Social Climate Fund (SCF)

The Social Climate Fund (SCF)³ is the EU’s financial instrument designed to address the social impacts of the green transition, particularly those arising from the extension of carbon pricing to buildings and road transport under ETS2.⁴ Its primary objective is to ensure that climate policies are implemented in a socially fair and inclusive manner, protecting vulnerable households, micro-enterprises, and transport users from disproportionate cost burdens.

The Fund supports both temporary income support and structural investments to reduce long-term exposure to fossil fuel price volatility. Eligible measures include direct support for vulnerable households, as well as investments in energy efficiency, building renovation, clean heating and cooling solutions, renewable energy, and zero- and low-emission mobility.

Access to the SCF is conditional on the preparation of Social Climate Plans, which Member States submit alongside their NECPs⁵. These plans identify vulnerable groups, assess the social impacts of carbon pricing, and define targeted mitigation measures, ensuring that SCF resources are strategically allocated, evidence-based, and aligned with broader climate and energy objectives.

The Social Climate Fund is financed primarily from revenues generated under ETS2⁶, reinforcing the principle that carbon pricing revenues should be recycled to support those most affected by the transition. In doing so, the SCF enhances the social acceptability and political sustainability of EU climate policy and complements other instruments such as the Just Transition Mechanism and EU energy poverty frameworks.