Just Transition [EU]
The Just Transition Fund
Regulation (EU) 2021/1056 establishing the Just Transition Fund
It sets up the Just Transition Fund (JTF), which aims to support the people, economies and environment of territories that face serious socio-economic challenges stemming from the shift towards a climate-neutral European Union (EU).
The JTF aims to contribute to the single specific objective of enabling regions and people to address the social, employment, economic and environmental impacts of the EU’s transition towards its 2030 targets for energy and climate and a climate-neutral economy of the Union by 2050, based on the Paris Agreement (see summary).
It is the first pillar of the Just Transition Mechanism, along with the InvestEU scheme and the Public Sector Loan Facility.
It is a key element of the European Green Deal (see summary).
Scope
The JTF supports sustainable investments in:
small and medium-sized enterprises, including micro enterprises and start-ups;
research and innovation activities, including those carried out by universities and public research organisations;
renewable energy and energy efficiency;
smart and sustainable local mobility, including decarbonisation of the local transport sector and its infrastructure;
modernisation of district heating networks;
digital innovation and connectivity;
rehabilitation of brownfield sites and green infrastructure;
retraining of workers and jobseekers;
education and social inclusion, including investments in infrastructure for training centres, and care facilities for children and the elderly.
Financing of the following is excluded:
the decommissioning or construction of nuclear power plants;
activities related to tobacco products;
investments related to fossil fuels;
companies in difficulty, unless authorised under temporary State aid rules set up to address exceptional circumstances.
Resources
The JTF has resources of €8.4 billion at current prices from the 2021–2027 multiannual financial framework. The main amount may be increased, as appropriate, by voluntary transfers from the European Regional Development Fund (ERDF) and the European Social Fund Plus (ESF+).
€10.8 billion will come from the EU recovery instrument NextGenerationEU , in addition to the planned resources:
€2 billion in 2021
€4 billion in 2022
€2 billion in 2023.
The common EU rules for socio-economic and cohesion policy funds are set out in Regulation 2021/1060 (see summary).
Access to funding
Access to JTF funding is dependent on the EU Member States committing to achieving climate neutrality by 2050.
Only 50% of the national allocation will be available to those Member States that have not yet committed to the target.
Green reward mechanism
If the JTF’s resources are increased after 31 December 2024, the additional resources will be awarded to Member States based on a ‘green reward’ mechanism.
This means Member States that reduce their greenhouse gas emissions at a faster rate will receive additional allocations.
Application & Background
It has applied since 1 July 2021.
For more information, see:
Just Transition funding sources (European Commission)
Commission Staff Working Document on the territorial just transition plans (European Commission).
MAIN DOCUMENT
Regulation (EU) 2021/1056 of the European Parliament and of the Council of 24 June 2021 establishing the Just Transition Fund (OJ L 231, 30.6.2021, pp. 1–20).
Successive amendments to Regulation (EU) 2021/1056 have been incorporated into the original text. This consolidated version is of documentary value only.
RELATED DOCUMENTS
Regulation (EU) 2021/1060 of the European Parliament and of the Council of 24 June 2021 laying down common provisions on the European Regional Development Fund, the European Social Fund Plus, the Cohesion Fund, the Just Transition Fund and the European Maritime, Fisheries and Aquaculture Fund and financial rules for those and for the Asylum, Migration and Integration Fund, the Internal Security Fund and the Instrument for Financial Support for Border Management and Visa Policy (OJ L 231, 30.6.2021, pp. 159–706).
Regulation (EU) 2021/241 of the European Parliament and of the Council of 12 February 2021 establishing the Recovery and Resilience Facility (OJ L 57, 18.2.2021, pp. 17–75).
See consolidated version.
Commission Implementing Decision (EU) 2021/1129 setting out the annual breakdown of available allocations under the Just Transition Fund per Member State (OJ L 244, 9.7.2021, pp. 4–9).
Council Regulation (EU) 2020/2094 of 14 December 2020 establishing a European Union Recovery Instrument to support the recovery in the aftermath of the COVID-19 crisis (OJ L 433I, 22.12.2020, pp. 23–27).
Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — Sustainable Europe Investment Plan — European Green Deal Investment Plan (COM(2020) 21 final, 14.1.2020).
Communication from the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of the Regions — The European Green Deal (COM(2019) 640 final, 11.12.2019).
Paris Agreement (OJ L 282, 19.10.2016, pp. 4–18).
Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ L 275, 25.10.2003, pp. 32–46).
Public sector loan facility under the just transition mechanism
Regulation (EU) 2021/1229 on the public sector loan facility under the just transition mechanism
It sets up the public sector loan facility (PSLF), which aims to support European Union (EU) regions that face serious social, economic and environmental challenges stemming from the shift towards a climate-neutral EU.
Through public sector investments, the PSLF aims to address the social, employment, economic and environmental impacts of the EU’s transition towards its 2030 climate and energy targets, and the objective of climate neutrality in the EU by 2050 at the latest, based on the Paris Agreement (see summary).
It is the third pillar of the just transition mechanism, along with the Just Transition Fund and the InvestEU scheme.
It is a key element of the European Green Deal (see summary).
Objective
The specific objective of the PSLF is to increase public sector investments in sustainable investment projects that address the development needs of the territories concerned, but which may not create sufficient revenue streams to cover their investment costs.
Budget and financing
The PSLF will provide projects a combination of grants awarded by the European Commission and loans generated on preferential terms by the European Investment Bank (EIB).
The PSLF is expected to open up €18.5 billion of investment.
EU grants will provide around €1.5 billion, with €250 million of that coming from the EU budget – at current prices from the 2021–2027 multiannual financial framework.
Loans from the EIB can provide up to €10 billion.
The facility may also be extended to finance partners* other than the EIB under certain conditions.
Eligibility
Projects must fulfil certain criteria:
they must have a measurable impact and include, where appropriate, output indicators that address the social, economic and environmental challenges arising from the EU’s climate transition targets;
they must benefit territories identified in a territorial just transition plan, even if the projects are not located in those territories;
they must support sustainable investments meeting the development needs of the territories concerned in:
renewable energy and green and sustainable mobility, including the promotion of green hydrogen and efficient district heating networks,
public research,
digitalisation,
environmental infrastructure for smart waste and water management,
sustainable energy, energy efficiency and integration measures, including renovation and conversion of buildings,
urban renewal and regeneration,
the transition to a circular economy,
land and ecosystem restoration and decontamination, taking into account the ‘polluter pays’ principle,
biodiversity,
up-skilling and re-skilling, training and social infrastructure, including care facilities and social housing, and
investments in other sectors that could also be supported if they are consistent with the approved territorial just transition plans;
they must not support activities excluded under Article 9 of Regulation (EU) 2021/1056 establishing the Just Transition Fund.
Oversight
The regulation sets out rules for the programming, monitoring, evaluation and control of the facility.
The facility is implemented through work programmes, which include award criteria assessing the relevance, impact and quality of the projects. For situations where the requested funding exceeds the financing available, priority is given to:
projects promoted by beneficiaries located in less developed regions;
projects that contribute directly to the achievement of the EU’s 2030 climate and energy targets and the objective of climate neutrality in the EU by 2050 at the latest;
projects promoted by beneficiaries that have adopted decarbonisation plans.
The management of the public sector loan facility has been delegated to the European Climate Infrastructure and Environment Executive Agency.
Territorial just transition plans will describe the sectors and areas that could be supported by the public sector loan facility.
The European Parliament and the Council of the European Union will perform an interim evaluation of the facility before 30 June 2025.
Application & Background
It has applied since 19 August 2021.
For further information see:
Just transition mechanism (European Commission).
KEY TERMS
Finance partners. The EIB, other international financial institutions, national promotional banks and financial institutions, including private financial institutions, with which the Commission signs an administrative agreement to cooperate within the facility.
MAIN DOCUMENT
Regulation (EU) 2021/1229 of the European Parliament and of the Council of 14 July 2021 on the public sector loan facility under the Just Transition Mechanism (OJ L 274, 30.7.2021, pp. 1–19).
RELATED DOCUMENTS
Regulation (EU) 2021/1060 of the European Parliament and of the Council of 24 June 2021 laying down common provisions on the European Regional Development Fund, the European Social Fund Plus, the Cohesion Fund, the Just Transition Fund and the European Maritime, Fisheries and Aquaculture Fund and financial rules for those and for the Asylum, Migration and Integration Fund, the Internal Security Fund and the Instrument for Financial Support for Border Management and Visa Policy (OJ L 231, 30.6.2021, pp. 159–706).
Regulation (EU) 2021/1056 of the European Parliament and of the Council of 24 June 2021 establishing the Just Transition Fund (OJ L 231, 30.6.2021, pp. 1–20).
Successive corrections to Regulation (EU) 2021/1056 have been incorporated in the original text. This consolidated version is of documentary value only.
Regulation (EU) 2021/523 of the European Parliament and of the Council of 24 March 2021 establishing the InvestEU Programme and amending Regulation (EU) 2015/1017 (OJ L 107, 26.3.2021, pp. 30–89).
Communication from the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of the Regions – The European Green Deal (COM(2019) 640 final, 11.12.2019).