The Just Transition Fund is the 1st Pillar of the Just Transition Mechanism (JTM), which is part of the European Green Deal to create a climate-neutral economy in Europe by 2050. It is embedded in the cohesion policy. The other two pillars of the JTM are
- a dedicated just transition scheme focused on just transition objectives under InvestEU, applicable horizontally across all policy windows, supporting additional investment to benefit the territories identified in territorial just transition plans.
- a Public Sector Loan Facility (PSLF), combining EU grant support and European Investment Bank (EIB) loans. The facility specifically targets public entities, creating preferential lending conditions for projects that do not generate sufficient revenue to be financially viable. It consists of a combination of grants (€1.5 billion) from the EU budget and loans (€10 billion) provided by the EIB. The grant support will be added to the EIB loan and reduce the financial burden for beneficiaries and increase the attractiveness of the investments concerned.
In addition, the InvestEU Advisory Hub will provide the possibility for the respective territories to benefit from technical assistance.
The Just Transition Fund (JTF) aims to reduce the social and economic costsresulting from the transition to the EU’s 2030 climate target and the EU climate neutral economy by 2050, to make sure that no region is left behind. It supports a diversification of economic activity, creating new business opportunities and helping people adapt in a changing labour market.
JTF focuses on the regions that are most affected by the transition given their dependence on fossil fuels, including coal, peat and oil shale or greenhouse gas-intensive industrial processes, and that have less capacity to finance the necessary investments. The proposed eligible regions have been suggested by the Commission in an analysis provided in the context of the European Semester, and have been laid out in the Annex D of the 2020 European Semester Country Reports.
In alignment with the objective of the fund, activities are eligible only if they aim to alleviate the socio-economic costs resulting from the transition and contribute to the implementation of the Territorial Just Transition Plans (TJTPs). In fact, in order to unlock funding from the JTF, EU countries will have to prepare their Territorial Just Transition Plans (TJTPs) identifying the eligible territories that are expected to be the most negatively impacted by the transition to a climate-neutral economy. The fund provides targeted support to these territories.
The preparation of the TJTPs is a key condition for programming and subsequently implementing JTF resources. Each EU country will prepare them together with the relevant partners, in dialogue with the Commission, and by ensuring they are consistent with the National Energy and Climate Plans and TJTPs. The Commission will adopt the plans together with the programmes entailing JTF support.
The approval of the plans by the Commission will open the door to dedicated financing not only from the Just Transition Fund, but also from the dedicated just transition scheme under InvestEU and the EIB public sector loan facility.
What type of hydrogen related actions can be funded
The JTF aims at alleviating the impacts of the transition by supporting the most affected territories. In doing so, it promotes a balanced socio-economic transition in these territories, aiming to make their economies future-proof and to offer decent opportunities to their workers. Investments from the JTF should therefore focus primarily on diversifying the local economies and the reskilling or upskilling of workers and people.
Other activities covered by the thematic scope of the JTF Regulation, such as clean energy projects, smart and sustainable local mobility, energy efficiency of district heating networks, renewable energy, can be supported if their contribution to alleviate the transition’s impacts is justified in the TJTP.
The JTF can under certain conditions (listed in the JTF Regulation) give support, in industrial facilities, to investments reducing GHG emissions from activities listed in Annex I to the EU Emissions Trading System (ETS) Directive. In industrial processes, hydrogen use is an example that could be considered. The JTF cannot support investment related to the production, processing, transport, distribution, storage or combustion of fossil fuels.
It should be noted though that described scope of activities eligible for support from the JTF only defines general eligibility rules. For a specific project to be eligible for support, it has to also be part of the sectors and the types of operations envisaged in the Commission approved, territorial just transition plan relevant for the region where the investment is planned.
The Just Transition Fund has a budget of €19.2 billion from the Multiannual Financial Framework and from Next Generation EU (in current prices). Funding is disbursed in the form of grants, procurement and financial instruments. The allocation method ensures that while all EU countries can access funding, resources will be concentrated on regions that are expected to be the most negatively impacted by the green transition. Poland receives the biggest share, followed by Germany and Romania.
The proportion of the investments to be provided by EU funding (co-financing of eligible costs) is set at maximum of 85% for less developed regions, 70% for transition regions and 50% for more developed regions. In the case of projects generating income the maximum funding rate will also be limited by the funding gap of the project.
Conditions for application
The specificities of the conditions for application will be defined in specific calls organised by individual EU countries/regions. Type of recipients are national and local authorities, businesses and start-ups in the regionwhere the magnitude and impact of the climate transition are greatest. The Territorial Just Transition Plans identify the eligible territories. These plans set out the challenges in each territory, as well as the development needs and objectives to be met by 2030. They identify the types of operations envisaged and specify governance mechanisms.
How to apply and when
The Just Transition Fund is co-managed and accessible through the competent authorities in charge of the cohesion policy programmes. This means that depending on the geographic location of the project proponent and/or of the proposed project, the entry point to apply is the Territorial Just Transition Plan covering the geographic location of the project proponents and/or the proposed project. It is up to the national or regional managing authority to publish the calls, establish the selection criteria, and evaluate the projects.
The Commission has set up a Just Transition platform to assist EU countries and regions in finding support available through the Just Transition Mechanism. This online platform will provide technical and advisory support for public and private stakeholders in coal and carbon-intensive regions, with easy access to information on funding opportunities and sources of technical assistance.
In addition to the implementing agencies in relevant EU countries, the other relevant stakeholders in the application process are
- the European Investment Bank (EIB), which is the main implementing partner of the InvestEU programme and will participate in all three pillars of the Just Transition Mechanism
- the executive agency of the European Commission (CINEA), which will be in charge of a portfolio of projects selected under Public Sector Loan Facility (the third pillar of Just Transition Mechanism)
Project selection criteria shall be defined individually by EU countries.
The grant support is provided in the form of lump-sum payments, in the form of reimbursement of costs actually incurred by the beneficiary. The disbursement of grants are governed by grant agreements and by Title VIII EU Financial Regulation.
Programme specific websites
The Just Transition Platform accompanying EU countries and regions to achieve a just transition
To aid EU countries and regional authorities: Toolkit on sustainability transitions for cohesion policy
Example(s) of selected projects
Not available yet
Database of examples
Not available yet