Financing the ecological transition - MEPs call for improvements to current plans 

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MEPs on Thursday adopted their position on a scheme to help public investments in regions most hit by the ecological transition.

MEPs voted 75 in favour, 10 against and 12 abstained.

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. This would include for example a territory whose economy very much depends on mining, an activity which will come under increasing pressure to be wound down.

MEP improvements

Voting in committee, MEPs of the Budgets and economic and monetary affairs committees, made amendments to the Commission proposal to increase the funding for the Facility coming from the EU budget and to allow financial support also for the preparation stage of an investment project. MEPs also want to link a conditionality to the access to the Facility’s money, to ensure that beneficiaries respect the EU’s Treaty-based fundamental values.

MEPs also enlarged the scope of beneficiaries to include state-owned enterprises and local or regional authority owned enterprises. Also, according to the text adopted, projects which would have already started but could not be completed due to funding could also be eligible.

Henrike Hahn (Greens, DE), the rapporteur for the economic and monetary affairs committee said: “I am particularly happy that we managed to include stringent eligibility conditions to ensure that the projects to be financed comply with minimum sustainability requirements. To be eligible, the projects cannot cause any harm to any of the environmental objectives established by the EU Taxonomy and cannot lead to a lock-in of carbon assets and undermine the EU objectives for climate and environment.”

“Our text also emphasises that the objectives of this Facility is to contribute to the achievement of the Union’s updated 2030 targets for climate and energy and to the transition towards a climate-neutral economy by 2050 at latest as well as to the UN SDGs. It also clarifies that beneficiaries and projects under this Facility shall comply with the Union’s Treaty-based fundamental values, so that the Commission can reject applications that do not respect human rights, the right of minorities and the principle of non-discrimination.”

Johan Van Overtveldt (ECR, BE), the rapporteur for the budgets committee said: “To be attractive, the implementation of the Facility should be simple and not require disproportionate administrative burden to the beneficiaries. Requirements should not trigger additional application, evaluation and reporting costs, which may offset the benefits of the grant component’s support."

Sustainable Europe Investment Plan

In a separate vote on a non-binding report concerning Sustainable Europe Investment Plan (SEIP) and financing the Green Deal, which passed with 68 votes in favour, 16 against, and  13 abstentions, MEPs stressed that one of the objectives of the SEIP should be to ensure a shift from unsustainable to sustainable economic activities. They insist that the green transition should be inclusive and in line with the principles of economic, social and environmental sustainability. It should also focus on reducing disparities between Member States, which should boost competitiveness and result in sustainable, high quality jobs.

The MEPs from the two committees agreed that public investments should respect the ‘do no significant harm’ principle applying to both social and environmental objectives and go to national and regional programmes with the highest potential to achieve these objectives. Therefore, they insist on harmonised sustainability indicators and a methodology for measuring impact.

Financing of the SEIP

MEPs question whether the SEIP, will enable the mobilisation of EUR 1 trillion by 2030, given the negative economic outlook following the COVID-19 crisis, question how the new MFF as proposed by the Commission and as agreed in the European Council’s Conclusions would enable the achievement of the SEIP targets and call for the new figures. Additionally, they stress that public and private investment must complement each other and that private sector investment should not be crowded out.


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.

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).