The mechanism will consist of three pillars: the Just Transition Fund, a just transition scheme under InvestEU and a loan facility with the European Investment Bank (EIB). Taken together, it is expected to mobilise at least €100 billion for just transition in EU regions.
The Just Transition Fund will have its own budget of €7.5 billion, complemented by the European Regional Development Fund (ERDF) and European Social Fund Plus (ESF+), as well as national co-financing. With these additional resources, it is expected to generate €30-50 billion in total. Support will be available to all Member States, while focusing on the regions most affected by climate transition. It will be allocated on the basis of greenhouse gas (GHG) emissions of industrial facilities in NUTS2 regions with high carbon intensity, employment in industry in these regions, employment in coal and lignite mining, production of peat and production of oil shale. The allocation method will also take into account the country’s level of economic development (gross national income (GNI) per capita). Eligible territories will correspond to NUTS3 regions or parts thereof. The activities supported will include investments in SMEs, clean technologies, renewable energy, energy efficiency, and reskilling of workers. Territorial just transition plans will be prepared, and a set of indicators used to monitor progress.
The dedicated just transition scheme under InvestEU is expected to mobilise up to €45 billion, mostly of private investments. The target of generating this amount corresponds to a provision of around €1.8 billion from the EU budget under the InvestEU programme. Its scope will be broader than the Just Transition Fund, financing projects not only in just transition territories, but also outside (if these projects are key to the transition within the just transition territories). It will fund renewable energy investments, energy efficiency schemes, and energy and transport infrastructure, including gas infrastructure and district heating, as well as decarbonisation projects, economic diversification of the regions and social infrastructure.
The public-sector loan facility with the European Investment Bank, backed by the EU budget, will provide subsidised financing to local authorities in the regions concerned. It is expected to leverage public funding and mobilise €25-30 billion in investments. The loan facility will rely on a contribution of €1.5 billion from the EU budget and EIB lending of €10 billion at its own risk. Support may take the form of an interest rate subsidy or an investment grant (financed from the EU budget), blended with loans provided by the EIB to municipal, regional or other public authorities. It will finance energy and transport infrastructure, district heating networks, energy efficiency measures including renovation of buildings, and social infrastructure. Similar to InvestEU funding, its scope will go beyond the transition territories to include other regions, if the projects are key to transition within the just transition territories. This may be the case for instance for transport or energy infrastructure projects that improve the connectivity of the just transition territories.
Read more in our publication on "Just Transition Mechanism in EU Regions":
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