Climate neutrality: Council adopts the Just Transition Fund
The Council today adopted a regulation establishing a €17.5 billion fund which will contribute towards making the green transition fair and inclusive.
The Just Transition Fund (JTF) will finance projects that will alleviate the socio-economic costs for communities across the EU that are heavily dependent on fossil fuels or greenhouse gas-intensive industries and need to diversify the local economy.
This is one of the measures the EU is taking to achieve its goal of a 55% reduction in greenhouse gas emissions by 2030 and climate neutrality by 2050.
The success of the European Green Deal rests on us mitigating the consequences for those most affected by the decarbonisation of the economy. The Just Transition Fund will provide much needed support to companies and workers at local level, so that we can combat climate change together as a Union, leaving no one behind.
Nelson de Souza, Portuguese Minister for Planning, Council presidency
EU regions and member states have a different starting point in the climate transition and different capacities to tackle the challenges ahead. In this respect, the JTF aims to prevent widening disparities by investing in territories which need to phase out the production and use of coal, lignite, peat and oil shale or transform heavily polluting industries.
Funding will be made available only on the basis of territorial just transition plans to be prepared by member states together with the relevant local and regional authorities. The plans will identify the most affected territories and their investment needs.
The total amount of €17.5 billion (in 2018 prices) is made up of €7.5 billion available for budgetary commitment for the period 2021-2027 and €10 billion from the recovery instrument (Next Generation EU) available over the years 2021, 2022 and 2023.
Member states will also contribute towards JTF programmes. In addition, they can transfer resources from the European Regional Development Fund and the European Social Fund Plus. This can potentially mobilise close to €30 billion in investment.
Scope of support
The JTF will support small and medium-sized enterprises (SMEs), including start-ups, and the creation of new firms.
A main emphasis of the fund is helping people adapt to new employment opportunities through investment in training and retraining of workers and job seekers, job-search assistance as well as measures for social inclusion.
Other types of investment include research and innovation, the transfer of advanced technologies, affordable green energy and energy storage, the decarbonisation of local transport, digitalisation, and enhancing the circular economy, including through waste prevention.
Excluded from the scope of support are investments related to nuclear power stations, fossil fuels and tobacco products.
The Just Transition Fund is one of the three pillars of the Just Transition Mechanism proposed as part of the European Green Deal to ensure that the transition takes place in a fair way. The other two pillars are a budget guarantee under the InvestEU programme and a public sector loan facility.
The JTF regulation will next be published in the Official Journal of the European Union. It will enter into force on the day after its publication.
- Regulation establishing the Just Transition Fund including allocations per country in Annex I
- European Green Deal (background information)