Deal reached on programme to help regions most hit by transition to climate neutral EU 

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MEPs and member states on Monday reached a deal on the EU programme to support public sector efforts to deal with climate change.

The scheme, known as the Public Sector Loan Facility (PSLF) aims to support investments of public sector entities in the territories most negatively affected by the climate transition, as identified in the Territorial Just Transition Plans. This would include for example a territory whose economy very much depends on mining, an activity which will come under increasing pressure to be scaled back.

The Facility consists of a grant envelope of €1.5 billion coming from the EU budget and a loans envelope of €10 billion from the European Investment Bank (EIB). This money is expected to leverage between €25 and €30 billion of public investments over the next 7 years. Advisory support will also be provided to beneficiaries through the advisory hub set up under the InvestEU programme.

Some of the main gains by MEPs through the negotiations include:


  • An increased grant component for less developed regions of 25% of the loan component

  • Financial assistance will be provided also for the preparation of proposals for projects intended to benefit from the Facility’s resources.

  • Provisions to ensure that the EU’s fundamental values, environmental protection, and gender equality, are respected by beneficiaries.

  • The award criteria that kick in when demand exceeds the available resources will include a preference to certain projects. These will be those promoted by beneficiaries located in less developed regions and those with decarbonisation plans and will support projects that contribute directly to the achievement of the Union’s 2030 climate and energy targets and the objective of EU climate neutrality by 2050.

  • Strong criteria for the selection of finance partners other than the EIB to ensure that the lending policy is consistent with EU environmental and social standards, good tax governance requirements and transparency of projects financed.



Co-rapporteur Johan Van Overtveldt (ECR, BE) said: “The transition towards a sustainable and climate-neutral economy represents a significant challenge for some territories. At the EP’s request the grant rate support for less developed regions is increased to a maximum of 25%.

“Given the challenges, projects in less developed regions give us the best opportunity to secure EU added value. An increased grant component influences the attractiveness of this Facility for these regions in a very direct way. But we also introduced other provisions to get the Facility going in all corners of the Union, such as the extension of the advisory support now eligible from a very early stage onwards, so that beneficiaries can receive advice before the application stage. This is very helpful for beneficiaries in regions with a lower administrative capacity.

“Overall, I’m also satisfied the implementation of the Facility does not require a disproportionate administrative burden to the beneficiaries which is important for the attractiveness of the Facility.”


Co-rapporteur Henrike Hahn (Greens, DE) said: "The Public Sector Loan Facility will support the green transition in Europe to achieve the Union’s 2030 climate targets and a EU climate neutrality by 2050 at the latest. I am happy we have agreed on robust criteria and safeguards to ensure that this Facility can play a meaningful role in achieving a just and inclusive transition.


“With this facility, we supportaffected regions and local municipalities to implement projects with higher impact and in full coherence with the European Green Deal. Priority will be given to projects located in less developed regions as well asto projects contributing to climate objectives and to public entities that have adopted a decarbonisation plan.


“I am also pleased that we managed to ensure that the Facility must comply with the Do No Significant Harm Principle, gender equality and EU fundamental rights. Projects will be subject to close monitoring by the Commission to ensure those conditions are respected.


“The Commission will also assess the possibility to introduce an obligation to conduct an ex-ante gender impact in the future to ensure the gender perspective is fully integrated in the planning and implementation of projects.”


Background


The Public Sector Loan Facility is a pillar of the Just Transition Mechanism, which also comprises the setting up of the Just Transition Fund and a specific component under InvestEU. The overall objective is to achieve EU climate-neutrality in an effective and fair manner, leaving no one behind. More concretely it must contribute to reaching the Union’s 2030 climate targets and the objective of EU climate neutrality economy of the Union by 2050.


To do this, the Facility will combine grants financed from the Union budget with loans granted on preferential terms by financial partners such as the European Investment Bank (EIB). It will create preferential lending conditions for projects that do not generate sufficient revenue to be financially viable.

The Facility runs from January 2021 to December 2027.