At this week’s plenary session the European Parliament adopted by a large majority the establishment of the Just Transition Fund out of which the green transition will be subsidized in European regions whose economies currently depend on coal and other fossil fuels.
The Fund worth 17.5 billion EUR of assistance will primarily assist member states in which fossil fuels play a significant role in their economies in order to mitigate the negative economic effects of the green transition.
The assets from the Fund can be used for retraining workers, aiding them in finding new jobs, transforming existing plants in the fossil fuel industries, sustainable mobility, nursing homes, etc. It will also render support to micro-companies, entrepreneurial incubators, universities, and public research institutions as well as investments in new energy technologies and energy efficiency.
‘The draft Directive of the European Parliament and Council on the establishment of the Just Transition Fund’ was adopted on Tuesday with 615 votes for, 35 against and 46 abstained.
The greatest contention in the negotiations of the Parliament, Commission, and Council, including among the representatives themselves was caused by the question of financing natural gas. The Just Transition Fund is part of the broader Just Transition Mechanism adopted with the intention of mitigating social and economic consequences of the transitions for regions in which an important role is played by the fossil fuel industries and consequently for workers in those industries.
The entire Just Transition Mechanism is a component part of the European Green Plan which is aimed at lowering the emissions of greenhouse gases by 55% by the year 2030 and of Europe becoming a climate-neutral continent by 2050. The Just Transition Fund is the only primarily social instrument adopted up to now as part of Europe’s Green Plan and to have full access to the assets of the Fund the member state will have to commit to achieving climate neutrality by 2050. Prior to reaching that goal, they will have the right to only 50% of the allocated funds.
In addition to the Just Transition Fund, through which grants will be distributed, the Mechanism consists of two more pillars: the InvestEU scheme, supporting private investments which contribute to regions with an approved transitional plan, and of a new instrument of the European Investment Bank for credit financing in the public sector.
The share of Union funds co-financing is limited to a maximum of 85 percent for less developed regions, 70 percent for transitional regions, and 50 percent for more developed regions.
The European Parliament announced on its website that if the assets for the Fund increase after December 31, 2024, a ‘Green Awards Mechanism’ will be introduced on the initiative of the Parliament. The additional funds will be distributed to member states, namely, the countries which reduce industrial emissions of greenhouse gases faster will receive more funds. (HINA).