The Just Transition Fund (JTF) is the EU funding tool to support regions in transitioning to cleaner energy by cutting down their fossil fuel dependency.
We know the detrimental environmental effects of greenhouse gas emissions like CO2 and methane, which have triggered a frightening climate change. These emissions are mainly due to human activity, which has increased over the years.
Unfortunately, our economies are still fossil fuel dependent, and cleaner energy like renewables have just started gaining traction. The Just Transition Mechanism and Fund will prove an essential aid in reaching the 2030 climate targets and making Europe climate neutral by 2050 with the European Green Deal.
What is the Just Transition Fund
The Just Transition Fund is part of the first pillar of the Just Transition Mechanism with added resources from InvestEU and public-sector loan facility. Investments made from these three pillars will focus on minimizing the effects of this transition in the EU Member States.
The Just Transition Mechanism consists of these three pillars:
- The Just Transition Fund
- A scheme under the InvestEU programme
- A public sector loan facility from the European Investment Bank (EIB) to mobilize investments in these regions.
The budget for Just Transition Fund is €40 billion and is available to help the EU Member States in their transition. From this amount, €10 billion comes from budget appropriations. The rest of €40 billion for the 2021-2024 period comes from externally assigned revenue from the European Recovery Instrument.
EU countries who wish to receive JTF funding will have to match each euro received from this fund with €1.5 to €3 of their own resources from the European Regional Development Fund (ERDF) and the European Social Fund Plus (ESF+). National co-financing will cover this EU budget spending according to cohesion policy. In doing so, the Just Transition Fund budget will be between €89 and €107 billion.
JTF will fund the economic diversification and modernization of the transitioning regions. This will translate into productive investments in SMEs, the creation of new firms, R&I, environment restoration, cleaner energy, upskilling and reskilling of workers, assistance to job seekers through various programmes, and the transformation of existing carbon-intensive sectors through emission cuts and job protection.
The InvestEU dedicated scheme
The dedicated InvestEU scheme is the second pillar of the Just Transition Mechanism.
A percentage of the InvestEU scheme amounting to €1.8 billion solely focuses on the transition goals. However, additional investments are made possible for projects outside the just transition territories, provided there are benefits to them.
InvestEU provides investments to additional projects than the Just Transition Fund. Examples are energy, transportation, gas infrastructure, decarbonization, economic diversification, and social infrastructure projects.
European Investment Bank (EIB) new loan facility
The EIB loan facility is the third pillar of the Just Transition Mechanism.
Apart from the €1.5 billion contributions from the European budget, the EIB loan facility will lend up to €10 billion. We are talking about mobilizing funds between €25 and €30 billion in public investments for the Just Transition objectives 2021-2027.
These loans will go to public-sector enterprises to support their initiatives in their sustainable journey to climate neutrality. Funding will primarily go to transportation, heating, energy efficiency initiatives, and social infrastructure projects.
Conclusion
Europe needs sustainability reforms to reverse the ongoing climate change, primarily due to greenhouse gas emissions produced by human activity. The shift to a carbon neutral future can only be gradual and has to start now from the EU regions.
The decarbonization efforts at the EU level and the shift to cleaner energy while keeping the consequent adversities to a minimum start with funding from the Just Transition Mechanism. The mechanism’s funding primarily involves grants from the Just Transition Fund, while InvestEU and EIB loan facility leverage public and private investments towards investment projects of EIB’s financial partners.
If you are interested in EU funding for green projects, the EUcalls database has many open calls for projects from various EU funding instruments like Horizon Europe and LIFE Programme that can help realize the green transition.
If you are not an EUcalls member yet, you can sign up for free to find your next EU funding opportunity.
