The Just Transition Fund
The Just Transition Fund (JTF) is the first pillar of the Just Transition Mechanism (JTM).
It will be a key tool to support the territories most affected by the transition towards climate neutrality providing them with tailored support. It is implemented under shared management, under the overall framework of Cohesion policy, which is the main EU policy to reduce regional disparities and to address structural changes in the EU.
The fund will be equipped with €17.5 billion (in 2018 prices; €19.3 billion in current prices). This amount corresponds to fresh money made available to support EU countries in their green transition, out of which €7.5 billion will be financed under the EU’s 2021-2027 budget, while the remaining €10 billion will constitute external assigned revenue stemming from the European Recovery Instrument (and, as such, will be made available from 2021 to 2023).
Member States may, on a voluntary basis, transfer to the JTF additional resources from their national allocations under the European Regional Development Fund (ERDF) and the European Social Fund Plus (ESF+), provided that the total amount transferred does not exceed three times the JTF allocation. Spending from the EU budget will be supplemented by national co-financing according to Cohesion policy rules.
The fund will alleviate the socio-economic costs triggered by climate transition, supporting the economic diversification and reconversion of the territories concerned. This means backing productive investments in small and medium-sized enterprises, the creation of new firms, research and innovation, environmental rehabilitation, clean energy, up- and reskilling of workers, job-search assistance and active inclusion of jobseekers programmes, as well as the transformation of existing carbon-intensive installations when these investments lead to substantial emission cuts and job protection. It is expected to mobilise close to €30 billion in investments.
A dedicated scheme under InvestEU
The dedicated InvestEU scheme is the second pillar of the Just Transition Mechanism.
It will be implemented under the InvestEU programme across the four policy windows. This means that InvestEU can support investments in the framework of the Territorial Just Transition Plan (TJTP) in a wider range of projects, such as projects for energy and transport infrastructure, including gas infrastructure and district heating, but also decarbonisation projects, economic diversification and social infrastructure.
The European Commission will provide a budgetary guarantee to implementing partners to provide financing directly or indirectly to project promoters located in just transition territories with an approved TJTP. Projects not located in those territories can also benefit from the scheme provided that those projects contribute to meeting the development needs stemming from the transition of those territories as set out in the relevant TJTP.
The InvestEU Advisory Hub will act as a central entry point for advisory support requests to any project under pillars 2 and 3 of the JTM, as well as for some projects to be financed under the JTF. It will provide tailor-made technical assistance and capacity-building support depending on the need of the project promoter. Advisory support will be available for the identification, preparation, development, structuring, procuring and implementation of projects, and for enhancing the capacity of project promoters to build a strong pipeline of projects in those territories.
New public sector loan facility leveraged by the European Investment Bank (EIB)
The Public Sector Loan Facility is the third pillar of the Just Transition Mechanism. It will combine €1.5 billion of grants, financed from the EU budget, with €10 billion of loans from the European Investment Bank (EIB), to mobilise between €25 and €30 billion of public investment that will meet the development needs of just transition territories. The facility could be extended in the future to finance partners other than the EIB.
This instrument will exclusively target public entities, providing support to projects that do not generate a sufficient stream of own resources to be financed commercially. Projects are expected to include investments in all types of public infrastructures, such as in the area of energy and transport, district heating networks, energy efficiency measures including renovation of buildings, as well as social infrastructure. Support to fossil fuels related investments is excluded.
Eligibility to funding
In the Territorial Just Transition Plans, EU countries will need to identify the territories and sectors eligible for funding under the Just Transition Fund. The identification of these territories will be carried out through a dialogue with the Commission. It will draw on the analysis provided in the context of the European Semester and in particular on the Commission’s proposal for priority regions and sectors in terms of eligibility,as laid out in the Annex D of the 2020 European Semester Country Reports. The approval of the plans by the Commission will open the door to dedicated financing not only from the Just Transition Fund but also from the dedicated just transition scheme under InvestEU and the EIB public sector loan facility. The plans will be annexed to the Cohesion Policy programmes entailing support for the Just Transition Fund, and will be adopted by the Commission together with these programmes.
The Just Transition Platform will play a key role in providing tailored technical support to authorities drafting the Territorial Just Transition Plan throughout the process, in order to ensure that they reflect the specific needs of each region.
The Commission has launched in March 2020 a call for requests under the Structural Reform Support Programme to assist Member States with the preparation of their territorial just transition plans to unlock funding from the Just Transition Mechanism. Currently, technical support is provided to 18 Member States.
Over the past two years, the Commission through its Structural Reform Support Programme also provided hands-on support to regions to help prepare long-term economic strategies for their transition out of coal, such as in Slovakia's Horna Nitra region, Greece's Western Macedonia or Romania's Jiu Valley.
Member States will have the opportunity to request additional technical support under the future 2021-2027 Technical Support Instrument, including on regulatory and administrative reforms related to the just transition agenda.
Technical assistance is also delivered to a number of territories in the EU through the Initiative for Coal Regions in Transition.
Other relevant possible funding streams
A number of other EU funding instruments are available to possibly support programmes and projects focused on just transition: