The European Council has adopted a regulation establishing a €17.5 billion ($21.3 billion) fund which will contribute towards making the green transition fair and inclusive.
As Europe advances its transition to cleaner energies, many countries still heavily reliant on fossil fuels are concerned about ensuring a just energy transition. It is important that socio-economic costs for communities across the EU are kept to a minimum and jobs are protected, especially in greenhouse gas-intensive industries that need to diversify.
The Just Transition Fund (JTF), a regulation that will next be published in the Official Journal of the European Union, is designed to facilitate a just transition by financing projects aligned with Europe’s net zero goals, driving investment in territories that need to phase out the production and use of coal, lignite, peat and oil shale or transform heavily polluting industries.
The Just Transition Fund is one of the three pillars of the Just Transition Mechanism proposed as part of the European Green Deal to ensure that the transition takes place in a fair way. The other two pillars are a budget guarantee under the InvestEU programme and a public sector loan facility.
Nelson de Souza, Portuguese Minister for Planning, Council presidency, said: “The success of the European Green Deal rests on us mitigating the consequences for those most affected by the decarbonisation of the economy. The Just Transition Fund will provide much needed support to companies and workers at local level, so that we can combat climate change together as a Union, leaving no one behind.”
Funding will be made available only on the basis of territorial just transition plans to be prepared by member states together with the relevant local and regional authorities. The plans will identify the most affected territories and their investment needs, as member states have different starting points in the climate transition and different capacities to tackle the challenges ahead.
The total amount of €17.5 billion ($21.3 billion) is made up of €7.5 billion ($9 billion) available for budgetary commitment for the period 2021-2027 and €10 billion ($12.2 billion) from the recovery instrument (Next Generation EU) available over the years 2021-2023.
Main areas of support:
- Small and medium-sized enterprises (SMEs), including start-ups, and the creation of new firms.
- Assisting people to adapt to new employment opportunities through investment in training and retraining of workers and job seekers, job-search assistance, as well as measures for social inclusion.
- Investment in research and innovation, the transfer of advanced technologies, affordable green energy and energy storage, the decarbonisation of local transport, digitalisation, and enhancing the circular economy, including through waste prevention.
Excluded from the scope of support are investments related to nuclear power stations, fossil fuels and tobacco products.