A €17.5 bn fund to ensure no one is left behind on the road to a greener economy

(Credit: Unsplash)

This article is brought to you in association with the European Commission.


The Just Transition Fund will help EU countries address the social and economic impact of the transition to climate neutrality.

The package comprises €7.5 bn from the 2021-2027 Multiannual Financial Framework and an additional €10 bn from the EU Recovery Instrument. To be eligible, projects must focus on economic diversification, reconversion or job creation, or they must contribute to a transition to a sustainable, climate-neutral and circular European economy.

The Just Transition Fund (JTF) will finance job seeking assistance, up-skilling and reskilling, as well as the active inclusion of workers and jobseekers as Europe’s economy shifts towards becoming climate neutral. It will also support micro-enterprises, business incubators, universities and public research institutions, as well as investments in new energy technologies, energy efficiency, and sustainable local mobility.

Waste incineration will not receive support through the JTF. Neither will the decommissioning nor construction of nuclear power stations, activities linked to tobacco products and investments related to fossil fuels.

In their just transition plans, member States have to identify their territories worst affected by the energy transition, and concentrate the JTF resources they receive there. Particular attention should be given to the specificities of islands, insular areas and outermost regions.

At the initiative of Parliament, a “Green Rewarding Mechanism” will be introduced to the JTF if the fund’s resources are increased after 31 December 2024. These additional resources would be distributed among member states, with those that succeed in reducing industrial greenhouse gas emissions receiving more funding.

Other key aspects of the regulation

  • Access to the JTF for member states will be conditional on their adoption of national-level commitments to achieve climate neutrality by 2050. Before the adoption of this target, member states will be entitled to only 50% of their national allocation;
  • Businesses in financial difficulty may receive support in compliance with temporary EU state aid rules established to address exceptional circumstances;
  • Resources may be transferred from other cohesion funds on a voluntary basis;
  • The proportion of the investments provided by EU funding (co-financing) is set at a maximum of 85% for less developed regions, 70% for transitional regions and 50% for more developed regions.


The proposal was adopted on Tuesday by 615 votes in favour, 35 against and 46 abstentions.

Quote

Rapporteur Manolis KEFALOGIANNIS (EPP, GR) stated: “The European Parliament gives a strong political signal: the social, economic and environmental impact of the energy transition in the most affected regions must be addressed. We are moving into a new green era for Europe without leaving anyone behind.”

Next Steps

Once the Council has formally adopted the deal, the regulation will enter into force on the twentieth day following that of its publication in the Official Journal of the EU.

Background

The Just Transition Fund (JTF) is the first pillar of the Just Transition Mechanism, a key tool to support regions, industries and workers expected to face the greatest challenges from implementing the European Green Deal. Legislators reached a provisional political agreement on the JTF on 9 December 2020.

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