European policymakers have made the low-carbon energy switch central to post-coronavirus economic recovery plans, more than quadrupling the size of the Just Transition Fund to €40bn
The European Union has set its agenda for carbon neutrality by 2050
The European Commission (EC) has shed more light on its plans to boost clean energy investments through the Just Transition Fund, as part of the region’s wider post-coronavirus stimulus package.
President Ursula von der Leyen yesterday revealed the funding mechanism would be boosted to €40bn – more than four times the size of its previous €7.5bn capacity – in a bid to accelerate the continent’s progress towards meeting net-zero targets by 2050.
According to today’s (28 May) update, a public sector loan facility under the scheme will be used to mobilise up to €30bn in investments, aimed at helping those member states furthest behind on the path to carbon neutrality to advance their clean energy transitions.
Trillion-dollar European stimulus package has made clean energy a key driver
With the support of the European Investment Bank (EIB), the facility will include €1.5bn in grants from the EU budget and up to €10bn in loans from the EIB’s own sources.
It forms part of a wider €1.85tn funding injection, announced yesterday, that has been designed to help the EU kickstart its economy in the wake of coronavirus.
Valdis Dombrovskis, executive vice president for the EC’s Economy that Works for People, said: “Today we are making good on our promise to provide financial support to less-advantaged regions to help them to transition to a more climate-neutral economy.
“This loan facility will focus on boosting public investments that can contribute to the green transition in parts of Europe that are more carbon-intensive and grappling with greater socio-economic challenges – investments that would otherwise not happen.”
Just Transition Fund will help fossil fuel-reliant countries accelerate the switch to low-carbon energy
In January this year, before the coronavirus crept its way into Europe, the EU revealed the latest stage of its Green Deal economic reform agenda, which targets a €1tn investment drive over the coming decade to help the region reach net zero by 2050.
The Just Transition Mechanism is designed as a support structure to give additional help to countries less advanced on the path to carbon neutrality – regions like Poland, Hungary and the Czech Republic which remain dependent on carbon-intensive power sources like coal.
The additional financing opportunities announced today will prioritise the development of projects relating to energy and transport infrastructure, district heating networks, public transport, energy efficiency measures and social infrastructure.
The proposal still needs undergo negotiation and ratification within the European Parliament and Council before it can progress any further.
EIB vice president Lilyana Pavlova said: “While confronting the great socio-economic challenge posed by Covid-19, we should not forget the long-term fundamental threat of climate change.
“The proposed Just Transition Mechanism will be key to ensuring that transforming our economies to carbon neutrality will happen with shared benefits and no disproportionate costs among regions.”
Yesterday’s stimulus announcement promised a renovation drive of buildings and infrastructure, investment into renewable energy projects including the development of a clean hydrogen economy across Europe, and support for public transport and electric vehicle charging.
EC President Ursula von der Leyen said: “The recovery plan turns the immense challenge we face into an opportunity, not only by supporting the recovery but also by investing in our future. The European Green Deal and digitalisation will boost jobs and growth, the resilience of our societies and the health of our environment. This is Europe’s moment.”