Just Transition Fund (JTF) - Just Transition Mechanism
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The Just Transition Fund will support European Union (EU) regions relying on fossil fuels and high-emission industries in their green transition.
An animated infographic is available through this link: https://www.europarl.europa.eu/thinktank/infographics/JTF/index.html
The Just Transition Fund is an EU funding tool for regions dependent on fossil fuels and high-emission industries. The aim is to help them prepare for the transition necessary to achieve at least a 55 % reduction in emissions by 2030, and climate neutrality by 2050.
The European Green Deal and EU climate policies aim to improve environmental quality, ensure clean air and reduce health risks for the population. To achieve this green transition, the EU will support carbon-intensive regions in diversifying their economies and creating new jobs. Activities supported by the Just Transition Fund will include investments in small and medium-sized enterprises, research and innovation, renewable energy, emissions reduction, clean energy technologies, site regeneration, circular economy, and upskilling and reskilling of workers. The Just Transition Fund is part of a broader Just Transition Mechanism, which also includes two other pillars: a scheme under InvestEU aimed at mobilising private investments and a public sector loan facility to generate public financing.
The Just Transition Fund is the first pillar of the Just Transition Mechanism.
The fund will be equipped with €40 billion. This amount corresponds to fresh money made available to support EU countries in their transition, out of which €10 billion should come from budget appropriations, while the remaining additional resources of €40 billion, covering the period from 2021 to 2024, will constitute external assigned revenue stemming from the European Recovery Instrument.
In order to unlock funding from the JTF, EU countries will have to match each euro received from this Fund, for the share financed from the Union budget (€10 billion) with €1.5 to €3 from their resources of the European Regional Development Fund (ERDF) and the European Social Fund Plus (ESF+). This spending from the EU budget will be supplemented by national co-financing according to cohesion policy. This way, the JTF overall financing capacity exceeds €89 billion and may reach €107 billion.
The fund will support the economic diversification and reconversion of the territories concerned. This means backing productive investments in Small and Medium-sized Enterprises, 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.
A dedicated scheme under InvestEU
The dedicated InvestEU scheme is the second pillar of the Just Transition Mechanism.
A portion of financing under InvestEU, corresponding to €1.8 billion, will be focused on just transition objectives.
InvestEU will not only support investment in projects in just transition territories (regions having an approved transition plan under the Just Transition Fund rules), but also in other regions, provided that they benefit the just transition territories.
Similarly, InvestEU will support investments in a wider range of projects compared to the Just Transition Fund, such as projects for energy and transport infrastructure, including gas infrastructure and district heating, but also decarbonisation projects, economic diversification and social infrastructure.
The final use of InvestEU will remain demand-driven and will depend on the project pipeline and the capacity of the regions concerned.
New loan facility leveraged by the European Investment Bank (EIB)
The EIB loan facility is the third pillar of the Just Transition Mechanism.
With a contribution from the EU budget of €1.5 billion, the public sector loan facility will enable the EIB to lend €10 billion, which is in turn expected to mobilise between €25 and €30 billion of public investments supporting just transition objectives over the period 2021-2027.
These loans would provide public sector entities with resources to implement measures to facilitate the transition to climate neutrality. Supported investments will range from energy and transport infrastructure, district heating networks, energy efficiency measures including renovation of buildings, as well as social infrastructure.
While the Just Transition Fund will provide funding primarily in the form of grants, the two other financing streams planned as part of the Just Transition Mechanism (InvestEU scheme and EIB public sector loan facility) will leverage public and private investment by backing investment projects of financial partners such as the EIB.
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: