European policymakers insist that Russia’s invasion of Ukraine and the current energy crisis have accelerated the EU’s climate policy commitments. In dealing with the cost-of-living crisis, governments have begun to foreground the social aspects of energy policies and claim they are addressing the need for a just transition to a zero-carbon future. Of particular significance, EU member states agreed at the end of December 2022 on a Social Climate Fund to address social impacts of the energy transition.
In many ways, however, the dramatic events of the past year are threatening to push the climate and social justice agendas farther apart, making the politics of the transition more difficult and fraught. The EU is struggling with an emerging and defining trilemma of how to combine climate action, social justice, and democratic politics. Far from fulfilling its promise to foster citizen participation in climate policies, the European Green Deal, which aims to make the EU climate neutral by 2050, appears to have switched into technocratic crisis mode, effectively rendering the EU’s notion of a just transition more top down.
While the crisis conditions of 2022 of course imposed pressing constraints, the EU ultimately needs to make climate, social, and democratic reforms work together. The union needs to support a more open and participative approach toward converging social and climate priorities. In this sense, 2022 can be read as a wake-up call for Europe. Only by embedding social justice and meaningful democratic engagement can the EU accelerate—and sustain—the climate transition and overcome the bloc’s new trilemma.
The Politics of Social Emergency
Issues of social justice were already of acute concern due to the impact of the coronavirus pandemic, as the health emergency magnified the deleterious effects of inequalities across Europe. European society was already in a fragile state before Russia’s February 2022 invasion of Ukraine worsened economic and social conditions. The war has unleashed an energy and cost-of-living crisis that aggravates social vulnerabilities by pushing large parts of European society into energy poverty.
Even the middle class has struggled to absorb the eye-watering rise in energy costs, causing the politics of energy to dominate EU debates since the invasion started. As winter began to bite, the energy crisis deepened into what one observer called a “social catastrophe,” with some going so far as to label this an “existential crisis” for European societies. The cost of living has become one of voters’ main concerns across Europe. As energy prices and inflation have reached record highs, protests have spread across the continent.
Against this backdrop, European governments and the EU institutions have spent the past year exploring how best to bring down the cost of energy and alleviate social pressures. This topic has also been at the core of numerous EU summits and council meetings. These discussions have been complex and often centered on the technicalities of how best to contain energy price rises without overly distorting market mechanisms. But at their heart has been a highly political aim of curbing social frustrations over rising energy costs.
As the winter of discontent has deepened across Europe, governments have been on the defensive. To varying degrees in different European countries, the energy squeeze has benefited right-wing populist parties. Populists have positioned themselves as defenders of the vulnerable by painting climate action as an elite pursuit borne on the backs of the working class. Using the standard populist playbook, they have to some effect framed the crisis as a simplified binary: either governments focus on climate change, or they address citizens’ social hardships.
An analysis of statements by European right-wing populist parties and their leaders highlights how they have alluded to social injustices to oppose climate and energy policies for several years now. Populists have strongly pushed for energy subsidies to reduce the burdens on low-income households. This strategy took shape in late 2021 as energy prices started to rise and populist politicians blamed the European Green Deal for holding governments back from helping citizens out. As the crisis evolved in 2022, they had some success in turning climate action into the kind of wedge issue that gives populists their defining purpose.
In this political context, the EU has struggled to upgrade its policy commitments and instruments. The union’s Just Transition Fund has ramped up support for transitions in carbon-intensive regions but is not tightly attuned to redressing the distributional social effects of the energy transition among different groups of society. Of most direct relevance, the EU has agreed to set up a Social Climate Fund with a remit specifically aimed at vulnerable households and microenterprises. This is set to be the main vehicle to advance a social justice focus to the EU’s Fit for 55 package, which seeks to reduce EU greenhouse gas emissions by at least 55 percent by 2030. Despite the cost-of-living crisis, this new fund was held up in lengthy negotiations before a provisional agreement was reached at the end of 2022.
While this agreement on the Social Climate Fund is a major step forward, it comes with limitations. The fund’s setup is tied to an extension of the Emissions Trading System (ETS), which limits emissions of certain greenhouse gases while allowing companies to trade emissions allowances, as the fund aims to offset an introduction of carbon pricing into housing and transportation. EU member states have agreed on this extension, but it remains politically sensitive and subject to pushback in many countries. With a start date of 2026, the fund has been allocated a budget of €86.7 billion ($93.5 billion), with a 25 percent contribution from the member states—a substantially smaller amount than the European Commission’s original proposal of €144.4 billion ($155.8 billion) with 50 percent national funding.
This budget looks woefully insufficient and is dwarfed by the amount of fossil fuel subsidies that national governments have spent on trying to shield citizens from rising energy costs. That imbalance drives home the need to address energy poverty and inequalities more systematically instead of having to spend much more on these social concerns retroactively.
Although the final text of the agreement on the fund is yet to be published, it is clear that the instrument does not come with tight enough rules or social safeguards over how money is to be spent. The provisional deal does stipulate that up to 37.5 percent of funds can be used toward direct income support. Similarly, all revenues from the extension of the ETS have to be used for climate action, with member states required to prioritize social aspects. Still, how these injunctions translate into concrete policies remains unclear, and the details of implementation are ultimately left to the discretion of member states, many of which still perform weakly on social justice.
At the December 2022 European Employment and Social Rights Forum, policymakers agreed that despite some policy advances, social rights are not yet fully built into climate actions. Reflecting this, reports surfaced in late 2022 that the EU is creating a new fund, separate from the Social Climate Fund, specifically to help poorer households get through the energy crisis and transition.
These emerging contours of political debate are worrying for both climate action and European democracy, as illiberal forces have, in some countries, gained ground due to the difficult context since the invasion of Ukraine. A complex trilemma of the green transition, social justice, and democracy is coming to define European politics. Governments face the thorny puzzle of how to combine three aims: accelerate climate action, redress the social inequities of the energy crisis, and uphold democratic quality against illiberal politics.
Many governments, and populists both in and out of power, seem insistent that something has to give and that the three aims cannot all be advanced at the same time. While the challenge is steep, governments should not give in to the temptation to believe there is a zero-sum tension between social justice and climate priorities. And crucially, it is the third leg of the trilemma—democratic openness—that could help deal with the conundrum.
Citizens’ concerns about energy prices are real, of course, but subsidizing fossil fuels and hitting the brakes on the climate transition cannot offer a long-lasting way out of the social emergency. Rather, the need is for a tighter and more reinforcing linkage between climate action, social policies, and democratic engagement. This linkage has so far been conspicuously lacking in European policies. While the European Commission has placed considerable stress on social fairness and promised a transition that leaves no one behind, in practice climate and social policies have interacted little with each other. Climate policy has not always prioritized social justice outcomes, and social policy has steered clear of engaging with climate action—and this has left the political field open for populists.
Amid Europe’s much-commented polycrisis, which involves economic, social, environmental, political, health, and geopolitical emergencies all unfolding at the same time, this omission is increasingly damaging. The social and green agendas cannot be successfully advanced in isolation from each other. They need to be conceived and implemented as two sides of the same just transition coin.
Evidence suggests that citizens are becoming aware and supportive of this link. A 2022 survey showed that citizens do not see pro-climate policies as strongly to blame for the cost-of-living crisis and do not want to sacrifice the environment for economic policy. Indeed, most people see renewables as a way to save money and improve national security. Another poll indicated that even in the current crisis, 88 percent of Europeans support a green transition that leaves no one behind. There is even growing support among trade unions—often painted as skeptical about climate action putting traditional jobs at risk—for energy democracy and the greening of industrial production.
Rather than harness these shifts in public opinion, the EU and national governments have resorted to many highly top-down and technocratic means to introduce green policies, because leaders fear public opposition. These steps risk backfiring. As the EU has shifted into crisis mode, it has paid little attention to democratic norms, with few avenues for public dialogue and deliberation on the future of the clean energy transition.
Several examples of this trend are evident. Most governments and many subnational authorities have assumed emergency powers that embolden executives and short-circuit democratic checks and balances. In France in September 2022, President Emmanuel Macron chaired an extraordinary Defense Council, modeled on the country’s coronavirus response body, which could fast-track decisions without including the parliament. Meanwhile, decisions on EU structural funds, which aim to reduce economic inequalities across the union, have not guaranteed the representativeness of stakeholders; and when consulted, stakeholders have either been given insufficient time to comment or been involved too late in the decisionmaking process.
Similar shortcomings have been observed in the planning process for the EU’s Recovery and Resilience Facility, which aims to mitigate the economic and social impacts of the coronavirus pandemic. This planning process has overlooked inclusive stakeholder engagement, partly due to urgency and expediency: few member states have offered comprehensive public consultations, making it nearly impossible for external stakeholders to shape decisions key to their future well-being. Although participation and engagement are required under the European Code of Conduct on Partnership, the EU’s governance regulation, and the Aarhus Convention on information and decisionmaking, these requirements have been poorly carried out.
Under the Social Climate Fund, governments will need to draw up social climate plans. The content of these plans must include a summary of the stakeholder consultation process and explain how stakeholder input has been incorporated. Although civil society deemed this a positive first step, EU legislators have progressively weakened the provisions for meaningful participation. The fund risks heading toward a familiar EU format of selective consultation with relevant stakeholders, such as social partners recognized by the EU’s treaties, rather than a vibrant and open kind of citizen engagement. Civil society continues to urge EU legislators to involve the groups for which this fund is meant, but it remains unclear whether their participation will be guaranteed.
While participation linked to the Social Climate Fund remains curtailed, some observers might feel that real citizen engagement is being pursued through the climate assemblies that are multiplying across Europe. Dozens of these have been organized, some at the national level, most at the subnational level; in one notable example, the Brussels-Capital Region and the city of Milan agreed to create new permanent climate assemblies. However, while many of these initiatives have helped raise the profile of ambitious climate action, they are in and of themselves not enough to offset the lack of institutionalized citizen participation in the EU’s policy architecture. Connections between these assemblies and concrete initiatives aimed at the social dimension, like the Social Climate Fund, have not yet been made.
Engagement as a Bridge
The trilemma of reconciling climate action, social justice, and democratic engagement poses one of the most defining challenges for European politics. So far, the EU institutions and European governments have tended to approach this issue in terms of trade-offs rather than mutually reinforcing links between the three legs of the trilemma. A striking disconnect has opened between climate action and social justice measures, leaving both politically vulnerable. And tensions extend to the third dimension, because both of these policy areas are being pursued in ways that undercut full democratic engagement.
There is still no political agenda or policy architecture to help fuse social justice and ambitious climate action over the long term. As EU member states scramble to put together new social measures, it is becoming increasingly clear that these risk cutting across long-term climate goals. And the trend toward executive-dominated technocracy could have grave consequences for trust in institutions and democracy, which was already eroded during the coronavirus pandemic.
There is no easy route through this intricate set of policy conundrums. Yet, it is increasingly clear that governments need to find ways of positively combining climate action, social justice, and democratic engagement. If they fail to advance the three aims together, they will struggle to advance any of them individually. To foster the necessary buy-in to deliver the Fit for 55 package while maintaining social cohesion, EU leaders cannot continue to take policy measures in the supposed interest of vulnerable citizens without giving them an opportunity to make their voices heard.
In particular, more open forms of democratic engagement might offer a way to inject such positive linkages into the trilemma. To date, governments have tended to see the democracy leg of the trilemma as the most expendable, because it is the least tangible and least urgent policy goal. However, rather than seeing democratic engagement as an easy trade-off to the more concrete imperatives of climate and social measures, member states and the EU institutions might more aptly frame this dimension as a pathway to keeping climate and social justice priorities on track and in line with each other. If citizens feel they have more input into shaping a climate agenda that fully takes on board social justice, they are more likely to support energy transition measures over the long term, beyond electoral mandates.
This could be done in multiple ways. Some policy initiatives could be taken in the short term, while other, deeper reforms need to be contemplated over the longer term. In the short term, social cohesion indicators should be a required part of EU member states’ reporting on their national energy and climate plans, which outline how countries intend to meet the EU’s energy and climate targets. Member states should report not only who has been involved in the stakeholder process but also how their participation has been enabled all the way through from agenda setting to implementation and monitoring. The EU could tighten its governance regulation so that member states cannot pass off cosmetic consultation as the participation that the Social Climate Fund nominally requires. And the union should update its Code of Conduct on Partnership with the help of a more representative set of stakeholders, including those who are typically farthest away from decisionmaking.
Over the longer term, the Social Climate Fund could open itself to full democratic engagement and deliberation: a part of its budget could be spent in accordance with recommendations from a dedicated citizens’ assembly run under the fund. After the Conference on the Future of Europe, a citizen-led series of debates in 2021–2022, the EU promised to use citizens’ panels on a regular basis; one of these panels needs to be established on socially just climate transition measures. To better navigate future shocks, the EU should also put in place new architecture for participation that can feed into rapid responses during emergencies and bring about more egalitarian outcomes.
Policymakers will doubtless insist that the EU and its member states are already investing in social measures. However, these are currently too little and too reactive. They are often very general and do not address the specifics of climate-related challenges, or the “just transition” label is attached to interventions that are largely standard renewables projects without discernible sociopolitical dimensions. Moreover, these measures try to patch up the impact of climate action in a remedial fashion rather than being built into the core of approaches to the climate transition.
There will be no easy solution to these shortcomings, and the climate–social justice–democracy trilemma will inevitably stretch EU policy coherence in the years ahead. Yet, the union and its member states can take practical steps to cultivate positive linkages between the three agendas. Such linkages could help reverse what is at present a harmful cascade of negative trade-offs, with cost-of-living efforts eclipsing just transition priorities and these in turn emasculating democratic participation. With a little over a year until the next European Parliament elections, now is the time for political groups and national governments to think through this challenge and prepare themselves to tackle Europe’s new trilemma.
Namita Kambli is a research manager at E3G in Brussels. Her work on the just transition looks at how climate change and inequality intersect, and how aspects such as fairness and inclusion can be mainstreamed in climate action.
Carnegie Europe is grateful to the Open Society Foundations for their support of this work.