Research for REGI Committee - Briefing: - Assesment of the Just Transition Fund proposal

18-02-2020

Soon after unveiling the overall roadmap for its flagship European Green Deal initiative, the European Commission published its first concrete proposal on 14 January 2020, on how to establish a Just Transition Mechanism (European Commission, 2020a, 2020b and 2020c). The objective of this initiative is to provide support to territories facing serious socio-economic challenges arising from the transition towards climate-neutrality. To reach the €100 billion of Just Transition Mechanism financing (for the period 2021-2027) promised by European Commission President Von der Leyen, the initiative relies on three main pillars (European Commission, 2020a): 1. The creation of a Just Transition Fund (JTF): the Commission wants to add €7.5 billion of ‘fresh money’ to the total amount proposed in 2018 for the 2021-2027 Multiannual Financial Framework (MFF). This is supposed to trigger between €30 billion and €50 billion of additional funding for the regions most affected by the transition 2. The use of a portion of the InvestEU financing devoted to climate to mobilise a total of €45 billion of investment in ‘Just Transition’ projects between 2021 and 2027. 3. The creation a public sector loan facility at the European Investment Bank partly guaranteed by the EU budget, to mobilise between €25 billion to €30 billion of additional public investments in 2021-2027.

Soon after unveiling the overall roadmap for its flagship European Green Deal initiative, the European Commission published its first concrete proposal on 14 January 2020, on how to establish a Just Transition Mechanism (European Commission, 2020a, 2020b and 2020c). The objective of this initiative is to provide support to territories facing serious socio-economic challenges arising from the transition towards climate-neutrality. To reach the €100 billion of Just Transition Mechanism financing (for the period 2021-2027) promised by European Commission President Von der Leyen, the initiative relies on three main pillars (European Commission, 2020a): 1. The creation of a Just Transition Fund (JTF): the Commission wants to add €7.5 billion of ‘fresh money’ to the total amount proposed in 2018 for the 2021-2027 Multiannual Financial Framework (MFF). This is supposed to trigger between €30 billion and €50 billion of additional funding for the regions most affected by the transition 2. The use of a portion of the InvestEU financing devoted to climate to mobilise a total of €45 billion of investment in ‘Just Transition’ projects between 2021 and 2027. 3. The creation a public sector loan facility at the European Investment Bank partly guaranteed by the EU budget, to mobilise between €25 billion to €30 billion of additional public investments in 2021-2027.

External author

BRUEGEL - Aliénor Cameron, Grégory Claeys, Catarina Mideos and Simone Tagliapietra