MEPs approve EU aid to help regions most hit by transition to climate neutral EU 

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  • EU budget grants of €1.5 billion and European Investment Bank loans of €10 billion
  • For less developed regions the grant can be equal to 25% of the loan
  • The money will help regions dependent on carbon intensive industry to invest in a cleaner economy by supporting projects that do not generate sufficient revenue to be financially viable.

The EU budget will step in to help regions dependent on carbon intensive industry transition towards climate neutrality.

MEPs on Thursday approved the deal reached between Parliament and Council negotiators in April. 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.

Domino effect

The Facility consists of grants of €1.5 billion from the EU budget and loans 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.

Improvements made by MEPs

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.


The deal was backed by 635 MEPs in favour, 35 against and 21 abstentions.


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.