€17.5bn fund to help EU countries in transition to carbon neutrality

19 May 2021169 Views

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The Just Transition Fund will support jobseekers, upskilling and reskilling, micro-enterprises, business incubators, universities and more.

The European Parliament has approved a new fund to help countries navigate the social and economic impacts of transitioning to climate neutrality.

The €17.5bn Just Transition Fund comprises €7.5bn from the EU’s 2021 to 2027 Multiannual Financial Framework and €10bn from the EU Recovery Instrument.

The fund is the first pillar of the Just Transition Mechanism, which is designed to help regions, industries and workers as countries implement the European Green Deal.

‘We are moving into a new green era for Europe without leaving anyone behind’
– MANOLIS KEFALOGIANNIS, MEP

It will support projects that contribute to transitioning to a “sustainable, climate-neutral and circular European economy”, according to the European Parliament, through economic diversification, reconversion or job creation.

At the launch of the European Green Deal in 2019, European Commission president Ursula von der Leyen said a total of €100bn would be allocated to the Just Transition Mechanism.

The Just Transition Fund will assist jobseekers, as well as upskilling and reskilling initiatives, micro-enterprises, business incubators and universities and public research institutions. It will also finance new energy technologies, energy efficiency and sustainable local mobility.

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There will be no funding for waste incineration, fossil fuels, activities linked to tobacco products and the construction or decommissioning of nuclear power stations.

The fund is expected to be formally approved by EU member states in June, but access to the fund will depend on countries’ commitments to achieving climate neutrality by 2050.

For member states that haven’t set any such targets yet, they will be entitled to 50pc of their national allocation. A Climate Action Bill was approved by the Irish Government in April, which commits to achieving carbon neutrality by 2050 at the latest.

Member states must outline their worst-affected regions by the transition and concentrate the resources they receive from the fund there. Businesses facing financial difficulties due to the transition to climate neutrality may also qualify for support under exceptional circumstances in line with temporary EU state aid rules.

The European Parliament also plans to introduce a ‘green rewarding mechanism’ to the Just Transition Fund if its funding resources increase after 31 December 2024 to provide additional support to member states that have successfully reduced industrial greenhouse gas emissions.

MEP Manolis Kefalogiannis commented: “The European Parliament gives a strong political signal: the social, economic and environmental impact of the energy transition in the most affected regions must be addressed. We are moving into a new green era for Europe without leaving anyone behind.”

Lisa Ardill was careers editor at Silicon Republic until June 2021

editorial@siliconrepublic.com