For regions that have a lot of industry using carbon the move to a climate neutral economy can be challenging. Find out how the Just Transition Fund will help.
The EU is committed to achieving climate neutrality by 2050 and has integrated the target across all its policies within the European Green Deal to tackle climate change. This ambitious target requires a transition to a low carbon economy and is challenging for regions relying mostly on fossil fuels and carbon-intensive industries.
To address the social, economic and environmental impacts of the transition, the European Commission proposed in January 2020 the Just Transition Fund, part of the €1 trillion European Green Deal climate finance plan.
A budget tailored for European regions
MEPs approved the Just Transition Fund in May 2021, endorsing the agreement reached with the Council in December 2020 for €17.5 billion. For this €7.5 billion comes from the EU's budget for 2021-2027 and €10 billion from the EU Recovery Instrument.
All EU countries can access funding, but resources will be concentrated on regions facing the biggest challenges: regions with high carbon intensity, heavily using fossil fuels (coal, lignite, peat and oil shale). The wealth of the country will also be taken into account.
The Just Transition Fund package foresees:
- A co-financing rate of up to 85% for less developed regions, 70% for transition regions and 50% for more developed regions
- Exceptional support for businesses in difficulty in compliance with temporary EU state aid rules
- A request for EU countries to focus on supporting outermost regions and islands and earmark specific amounts from their national allocations in the framework of their territorial just transition plans
A Green Rewarding Mechanism proposed by the Parliament will be introduced if the fund's resources are increased after 31 December 2024. They would be distributed among EU countries, while those that had cut greenhouse gas emissions from industry the most receiving more.
Funding from the fund cannot be used for nuclear power stations being decommissioned or constructed, activities linked to tobacco products and investment related to the production, processing, transport, distribution, storage or combustion of fossil fuels.
Moving to a new green era without leaving anyone behind
- Small and medium-sized enterprises as well as micro-enterprises, universities and public research institutions
- Digital innovation and activities in the areas of education and social inclusion affordable clean energy, emission reduction, energy efficiency, renewable energy and energy storage technologies
- Heat production for renewables-based district heating
- Smart and sustainable local mobility
- Regeneration and decontamination of sites, land restoration and repurposing
- The circular economy, including waste prevention, reduction, resource efficiency, reuse, repair and recycling
- Upskilling and reskilling of workers for alternative employment
- Job search assistance
- Transformation of existing carbon-intensive installations
Just Transition Platform
In June 2020, the Commission launched the Just Transition Platform, providing support to public and private stakeholders from coal and other carbon-intensive regions. It will include a database of projects and experts, sharing information and technical advice.
In March 2018, the Parliament called for a comprehensive fund to be established to support a just transition in the energy sector.
In January 2020, the Commission proposed the Just Transition Fund to support the regions that will be most affected by this transition.
In July 2020, EU leaders agreed on a smaller amount for the recovery plan and the EU's budget for 2021-2027, which was strongly criticised by the Parliament.
During the plenary session on 23 July 2020, Parliament had already challenged the Council to justify the massive reductions in the budgets of the Just Transition Fund and InvestEU in the context of the Green Deal - a long-term EU priority that should not be put at risk.
The agreement between Parliament and the Council was confirmed by EU countries on 25 February 2021.