EU to provide EUR 17.5 billion towards transition to green economy

TALLINN - The European Parliament on Tuesday gave the green light to the 17.5-billion-euro Just Transition Fund (JTF), a facility that will address the social and economic impacts of the transition to climate neutrality.

In their just transition plans, member states have to identify their territories worst affected by the energy transition, and concentrate the JTF resources they receive there. Particular attention should be given to the specificities of islands, insular areas and outermost regions.

Committing to climate neutrality by 2050 is a condition for the financial support, and investments related to waste incineration and fossil fuels are excluded from grants, the European Parliament's press service said.

The package comprises 7.5 billion euros from the 2021-2027 multiannual financial framework and an additional 10 billion euros from the EU recovery instrument. To be eligible, projects must focus on economic diversification, reconversion or job creation, or they must contribute to a transition to a sustainable, climate-neutral and circular European economy.

The JTF will finance job seeking assistance, up-skilling and reskilling, as well as the active inclusion of workers and jobseekers as Europe's economy shifts towards becoming climate neutral. It will also support micro-enterprises, business incubators, universities and public research institutions, as well as investments in new energy technologies, energy efficiency, and sustainable local mobility.

Waste incineration will not receive support through the JTF. Neither will the decommissioning nor construction of nuclear power stations, activities linked to tobacco products and investments related to fossil fuels.

At the initiative of European Parliament, a Green Rewarding Mechanism will be introduced to the JTF if the fund's resources are increased after Dec. 31, 2024. These additional resources would be distributed among member states, with those that succeed in reducing industrial greenhouse gas emissions receiving more funding.

Access to the JTF for member states will be conditional on their adoption of national-level commitments to achieve climate neutrality by 2050. Before the adoption of this target, member states will be entitled to only 50 percent of their national allocation.

The proportion of the investments provided by EU funding is set at a maximum of 85 percent for less developed regions, 70 percent for transitional regions and 50 percent for more developed regions.

The proposal was adopted on Tuesday by 615 votes in favor, 35 against and 46 abstentions.