What role does the Just Transition Fund play in making Europe the first climate-neutral continent? 

1. The EU aims to reduce greenhouse gas emissions by 50 to 55 per cent by 2030, and achieve climate neutrality by 2050. This would make Europe the first climate-neutral continent – and in the process, boost the economy, improve people’s health and quality of life, show care for nature, and leave no one behind. 

2. On December 11, 2019, the European Commission presented the European Green Deal, a roadmap to make the EU’s economy sustainable by turning climate and environmental challenges into opportunities across all policy areas – and making the transition just and inclusive for all. 

3. This roadmap has various actions, in the journey towards a cleaner, circular economy and to stop climate change, revert biodiversity loss and cut pollution. One of the actions is the setting up of a Just Transition Mechanism, including a Just Transition Fund, and a Sustainable Europe Investment Plan. 

4. In a first vote on this first proposal from the Green Deal on July 6, the European Parliament’s Regional Development Committee approved the establishment of the Just Transition Fund, aimed at supporting the EU regions most affected by the transition to a low carbon economy. The agreed text includes the creation of a “Green Rewarding Mechanism”, allowing 18 per cent of the total JTF resources to be allocated depending on the speed with which member states reduce their greenhouse gas emissions, divided by their latest average GNI. Additionally, one per cent of the total amounts would be specifically allocated for islands, and one per cent for the outermost regions. Commenting, EP rapporteur Manolis Kefalogiannis said that the “Just Transition Fund is the first important step… the EP will continue to lead the way in the implementation of the Paris Agreement, pursuing a socially fair and green transition in our regions.”

5. Originally a €7.5bn fund, the Just Transition Fund was increased to €40bn, due to the context of recovery from the coronavirus pandemic. This includes €10 billion under the core EU budget and €30 billion from Next Generation EU recovery fund. Funding will be available to all member states, while focusing on regions with the biggest transition challenges. The proposed budget for the Just Transition Fund is to be complemented with resources from cohesion policy funds and national co-financing. 

6. The JTF  will be part of a Just Transition Mechanism which is based on three pillars: the Just Transition Fund, the InvestEU funding stream, and loans from the European Investment Bank backed by the EU budget. All these instruments are expected to attract €100 billion in public and private investment – money that could be used for workers to learn new skills for jobs of the future, support for businesses to create new employment opportunities as well as investment in clean energy and the insulation of homes.

7. The European Parliament has underscored that the JTF is not merely a fund, but a whole policy approach underpinned by investment. The activities supported by the fund would also include: microenterprises, sustainable tourism, social infrastructure, universities and public research institutions, energy storage technologies, low-emission district heating, smart and sustainable mobility, digital innovation, including digital and precision farming, projects fighting energy poverty, as well as culture, education and community building. For regions heavily reliant on the extraction and combustion of coal, lignite, oil shale or peat, MEPs proposed a derogation for investments in activities related to natural gas. 

8. So what is the next step? The European Parliament plenary is expected to vote on the draft report during its September sitting and give its mandate for inter-institutional negotiations for co-decision between Parliament and Council.

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