Just transition in EU regions: support to people, economy and environment

The EU must transition towards a climate-neutral economy without letting disparities between regions grow any further, say regional development MEPs.

• First vote on the new Just Transition Fund, first proposal from the Green Deal
• Creation of a “Green Rewarding Mechanism”
• Budget and scope of the new fund broadened by MEPs

On Monday 6 July, the Regional Development Committee approved the establishment of the Just Transition Fund (JTF) with 27 votes in favour, 7 against and 8 abstentions.

Allocation of financial resources

MEPs request a significant increase in the budget allocated from the 2021-2027 financial framework (from €11,270459,000 in current prices to €25,358532,750 in 2018 prices, also referred to as the “principle amount”). This amount would be supplemented with an additional €32, 803000,000 in current prices, as proposed under the EU Recovery Instrument.

The agreed text includes the creation of a “Green Rewarding Mechanism”, allowing 18% 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, 1% of the total amounts would be specifically allocated for islands, and 1% for the outermost regions.

With the JTF designed to support the most vulnerable communities in each region, MEPs call for a co-financing rate of up to 85% of costs for eligible projects.

Relation to existing EU cohesion policy instruments

The establishment of the JTF should not lead to cuts to, or compulsory transfers from, the other cohesion funds, underlines the agreed text. JTF resources may be complemented by resources transferred on a voluntary basis from the European Regional Development Fund (ERDF) and the European Social Fund (ESF+), while maintaining their original objectives.

Broadening the scope of support

MEPs agree that the scope of the JTF should be broader, focusing specifically on social cohesion and leading to job creation. 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 propose a derogation for investments in activities related to natural gas. In this sense, the Commission may approve Territorial Just Transition Plans that include such activities, if they qualify as “environmentally sustainable” in accordance with the Taxonomy Regulation and comply with six additional cumulative conditions.