(million EUR)
Financial programming | 9 248.0 |
NextGenerationEU | 10 872.9 |
Decommitments made available again (*) | N/A |
Contributions from other countries and entities | 167.7 |
Total budget 2021-2027 | 20 288.6 |
(*) Only Article 15(3) of the financial regulation.
Rationale and design of the programme
The Just Transition Mechanism has been proposed as part of the European Green Deal investment plan to make sure that no one and no region is left behind in the transition to a climate-neutral economy. The primary goal of the mechanism is to provide support to the most negatively-affected regions and people and to help alleviate the socioeconomic costs of the transition.
The transition towards climate neutrality will provide benefits and opportunities for the entire EU, but it will also present greater socioeconomic challenges and difficulties for some regions and sectors than for others.
The objective to support the people, economy and environment of territories facing economic and social transformation in their transition to a climate-neutral economy cannot be fully achieved by the Member States alone. There are many disparities between the levels of development and the financial resources of Member States and territories. There is also a need for a coherent implementation framework covering several EU funds under shared management to support this complex process. These objectives can be better achieved at the EU level.
The mechanism aims at alleviating, for the most affected territories, the economic, environmental and social costs of the transition towards climate neutrality by 2050, thereby effectively ensuring that this key EU objective is achieved in an effective and fair manner.
The mechanism is mainly established as part of the European Green Deal investment plan within the framework of cohesion policy, the main EU policy instrument to reduce regional disparities and to address structural change in Europe’s regions. It shares the objectives of cohesion policy in the specific context of the transition towards climate neutrality. While this is not an eligibility criterion, the resources from the mechanism should complement the other resources available.
The mechanism will contribute to a wide range of measures designed to promote public investment to foster sustainable development in the regions concerned. The mix of actions will depend on the circumstances of the territory affected by the climate transition challenge outlined in the territorial just transition plans.
The beneficiary territories to be supported by the mechanism have been identified in one or more territorial just transition plans (providing an outline of the transition process until 2030), which have been submitted by the Member States (except Bulgaria) and approved by the European Commission by the end of 2022. These plans, steered by the European semester process, devote special attention to those territories expected to suffer the greatest job losses and to the transformation of industrial facilities with the highest greenhouse gas intensity. The plans detail the social, economic and environmental challenges and the needs, for example, for economic diversification and reskilling.
The mechanism aims at alleviating the economic and social cost of the transition towards climate neutrality. It has three pillars. The first is the Just Transition Fund. The second is the dedicated just transition scheme under InvestEU. The third is the Public Sector Loan Facility.
According to the regulation, only areas identified for support in the territorial just transition plans included in the adopted programmes can receive support from the mechanism, amounting to EUR 19.3 billion. It will be implemented through shared management in close cooperation with national, regional and local authorities and stakeholders. This will ensure ownership of the transition strategy and provide the tools and structures for an efficient management framework. The Directorate-General for Regional and Urban Policy leads on behalf of the Commission. Mechanism resources could be reinforced on a voluntary basis with complementary funding from the European Regional Development Fund and the European Social Fund Plus. The respective amounts transferred from these funds should be consistent with the type of operations set out in the territorial just transition plans.
The second pillar of the mechanism is the dedicated just transition scheme under InvestEU. A portion of financing under InvestEU will focus on just transition objectives to support economically viable investments by private and public sector entities. This pillar is not part of this programme statement.
The Public Sector Loan Facility, with a budget of over EUR 1.5 billion, consists of a combination of grants from the EU budget and loans provided by the European Investment Bank. The implementation of the grant component has been delegated by DG Regional and Urban Policy to the European Climate, Infrastructure and Environment Executive Agency. It is delivered in direct management by launching open calls for proposals. The facility specifically targets public entities, creating preferential lending conditions for projects that do not generate sufficient revenue to be financially viable.
The Joint Transition Mechanism is a new mechanism for the 2021-2027 multiannual financial framework. It addresses new types of challenges arising from the necessary climate transition.
Programme website:
Impact assessment:
- In 2023, a mechanism-related study will assess the timeline of decarbonisation and coal phase-out commitments indicated by the Member States in their territorial just transition plans.
Relevant regulation:
- Regulation (EU) 2021/1056 of the European Parliament and of the Council of 24 June 2021 establishing the Just Transition Fund.
- Regulation (EU) 2021/1229 of the European Parliament and of the Council of 14 July 2021 on the Public Sector Loan Facility under the Just Transition Mechanism.
Evaluations:
- In 2025, a midterm review of the mechanism will be performed with regard to the specific objective set out in Article 2 of the regulation and to the evolution in the implementation of the sustainable Europe investment plan.
Budget
Budget programming (million EUR):
| 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | Total | |
|---|---|---|---|---|---|---|---|---|
| Financial programming | 4.0 | 1 534.8 | 1 610.2 | 1 635.7 | 1 661.8 | 1 387.2 | 1 414.3 | 9 248.0 |
| NextGenerationEU | 5.4 | 4 982.1 | 5 885.4 | 10 872.9 | ||||
| Decommitments made available again (*) | N/A | |||||||
| Contributions from other countries and entities | 46.3 | 121.5 | p.m. | p.m. | p.m. | p.m. | p.m. | 167.7 |
| Total | 55.6 | 6 638.3 | 7 495.6 | 1 635.7 | 1 661.8 | 1 387.2 | 1 414.3 | 20 288.6 |
(*) Only Article 15(3) of the financial regulation.
Financial programming:
+ EUR 0 million (+ 0%)
compared to the legal basis*
* Top-ups pursuant to Art. 5 of the multiannual financial framework regulation are excluded from financial programming in this comparison.
Budget performance – implementation
Multiannual cumulative implementation rate at the end of 2022 (million EUR):
| Implementation | 2021-2027 Budget | Implementation rate | |
|---|---|---|---|
| Commitments | 6 422.0 | 20 288.6 | 31.7% |
| Payments | 171.5 | 0.9% |
Annual voted budget implementation (million EUR) (1):
| Commitments | Payments | |||
|---|---|---|---|---|
| Voted budget implementation | Initial voted budget | Voted budget implementation | Initial voted budget | |
| 2021 | 3.9 | 1 137.0 | 1.2 | 0.0 |
| 2022 | 1 419.1 | 1 159.7 | 1.5 | 1.3 |
(1) Voted appropriations (C1) only.
LEGAL BASIS EXPLANATION [TO BE INTRODUCED UNDER BUDGET PROGRAMMING]
Regulation (EU) 2021/1056, establishing the mechanism was adopted in 2021, together with the regulation on the Public Sector Loan Facility under the mechanism. To help Member States in drafting the territorial just transition plans, the Commission published staff working document (2021) 275.
Pillar I – the Just Transition Fund
By the end of 2022, the Commission adopted all but one of the mechanism programmes submitted by the Member States. These include 67 territorial just transition plans, which support 96 specific territories. The implementation phase started directly after the mechanism programmes were adopted.
Programming negotiations were complex. The territorial just transition plans had to include a description of the transition process at the national level, and a demonstration of a negative impact at the level of the territory by 2030 or earlier. For coal regions, this impact had to be linked to the phase-out or scaling down of fossil fuel extraction or production. This was a condition for the approval of the plans. Without a demonstration of the transition process, the Commission services could not proceed with the adoption of the Just Transition Fund programmes. However, overall, the Just Transition Fund programming negotiation process was fruitful and with no delays in comparison with other funds: the first project was already selected in November 2022, i.e. when most (European Regional Development Fund / Cohesion Fund / Just Transition Fund) programmes were not yet adopted.
Pillar III – the Public Sector Loan Facility
The first call for proposals was launched in July 2022, when sufficient territorial just transition plans had been adopted. The call has three cut-off dates per year and will remain open until 2025. The first grant agreements are expected to be signed in 2024.
The current high level of inflation is not expected to have a specific major impact on the mechanism.
Note on the consequences of the Russian war of aggression against Ukraine on the implementation and performance of the programmes:
The war in Ukraine will asymmetrically impact many European regions. In the short term, some Member States may need to increase coal consumption before switching to renewables to reduce dependence on Russian fossil fuels. This will not affect the implementation and performance of the mechanism, provided that the 2030 climate and energy targets are respected. The Member States indicated safeguards in the territorial just transition plans that the short-term change does not affect the coal phase-out (without a meaningful transition process, there can be no mechanism support). Overall, the current energy crisis is a call to the Member States for the acceleration of the EU transition to renewables as a way to cut imports quickly while delivering on climate goals.
Contribution to horizontal priorities
Green budgeting
Contribution to green budgeting priorities (million EUR):
| Implementation | Estimates | Total contribution | % of the 2021–2027 budget | ||||||
|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | |||
| Climate mainstreaming | 1.7 | 6 393.5 | 7 032.4 | 1 585.7 | 1 611.8 | 1 337.2 | 1 364.3 | 19 326.6 | 96% |
| Biodiversity mainstreaming | 0 | 258.8 | 282.2 | 63.7 | 64.8 | 53.7 | 54.8 | 778.2 | 4% |
| Clean air | 0 | 776.4 | 847.0 | 191.2 | 194.3 | 161.1 | 164.4 | 2334.5 | 12% |
The mechanism was launched with the objective of turning the EU into a modern, resource-efficient and competitive economy and decoupling economic growth from resource use while eliminating net emissions of greenhouse gases by 2050. It ensures a just transition for all – leaving no person or region behind, thus contributing to the European Green Deal.
The first pillar of the mechanism – the Just Transition Fund – supports those regions facing the most serious socioeconomic challenges due to the transition process. These regions will need to phase out certain activities and restructure their industries. The mechanism will support, for example, sustainable productive investments in small and medium-sized enterprises, the creation of new firms, environmental rehabilitation, investments in clean energy, upskilling and reskilling of workers, job-search assistance, active inclusion of jobseekers’ programmes and the transformation of existing carbon-intensive installations, when these investments lead to substantial emission cuts and job protection.
By addressing the investment needs of the territories that are most negatively impacted by the transition towards a climate-neutral economy, the third pillar of the mechanism – the Public Sector Loan Facility – will provide a key contribution to mainstream climate actions. It covers a wide range of sustainable investments, including in relation to biodiversity, provided that such investments contribute to meeting the development needs of these territories caused by the transition towards the EU’s 2030 climate target, as established in Regulation (EU) 2021/1119 and climate neutrality in the EU by 2050, as described in the territorial just transition plans. The Public Sector Loan Facility is implemented by a call for proposals. Therefore its final contribution to climate, biodiversity and clean air is subject to the applications and support it will receive.
Gender
Contribution to gender equality (million EUR) (*):
| Gender score | 2021 | 2022 | Total |
|---|---|---|---|
| 0 |
0.0 |
4 545.0 |
4 545.0 |
| 1 |
0.0 |
1 825.6 |
1 825.6 |
| 2 |
0.0 |
51.4 |
51.4 |
(*) Based on the applied gender contribution methodology, the following scores are attributed at the most granular level of intervention possible:
- 2: interventions the principal objective of which is to improve gender equality;
- 1: interventions that have gender equality as an important and deliberate objective but not as the main reason for the intervention;
- 0: non-targeted interventions (interventions that are expected to have no significant bearing on gender equality);
- 0*: score to be assigned to interventions with a likely but not yet clear positive impact on gender equality.
As regards the first pillar, the mechanism aims at ensuring that the transition to a climate-neutral economy happens in a fair way, leaving no one behind, independent of gender and age. Territorial just transition plans should, where relevant, address demographic challenges (including on gender) in the regions affected by the transition. Mechanism investments (e.g. in reskilling and upskilling and diversification of the economy) should take into account the equal treatment of all genders.
For the third pillar, the contribution to gender equality is specifically mentioned in the application form that the applicants will need to complete. Among other things, applicants will be asked to explain the project’s impact on gender equality and how it approaches this issue. They will also have to explain how the project helps to fill gender gaps that may be linked to just transition, how the activities will contribute to improve the situation and how it will contribute to the promotion and advancement of gender equality and non-discrimination mainstreaming. For each proposal, the elements will be analysed by the Commission as part of the assessment of the ‘Relevance and impact’ award criteria.
Digital
Contribution to digital transition (million EUR):
| 2021 | 2022 | Total | % of the total 2021-2027 implementation | |
|---|---|---|---|---|
| Digital contribution | 0.0 | 892.2 | 892.2 |
14% |
Addressing the impacts of the transition towards a climate-neutral economy also means digitalisation. In 2022, more than EUR 800 million was invested in digitalisation, including for the digitalisation of public and private services, with a special focus on small and medium-sized enterprises (business development and internationalisation, including productive investments, e-commerce, digital innovation hubs and digital processes) and on innovation clusters, including businesses, research organisations and public authorities and business networks.
Budget performance – outcomes
| Baseline | Progress (*) | Target | Results | Assessment | |
|---|---|---|---|---|---|
| Enterprises supported | 0 | 0% | 40 004 in 2029 | No results | No data |
| Additional production capacity for renewable energy | 0 | 0% | 11 079 megawatts in 2029 | No results | No data |
| Additional capacity for waste recycling | 0 | 0% | 1.5 million tonnes per year in 2029 | No results | No data |
| Jobs created in supported entities | 0 | 0% | 59 980 in 2029 | No results | No data |
| Annual users of new or modernised public transport | 0 | 0% | 28 million in 2029 | No results | No data |
| Overall investment mobilised | 0 | NA | No target | No results | No data |
| Number of projects receiving financing under the facility | 0 | NA | No target | No results | No data |
| Greenhouse gas emission reduced, where relevant | 0 | NA | No target | No results | No data |
(*) % of target achieved by the end of 2022.
Link to file with complete set of EU core performance indicators
By the end of 2022, the Commission adopted all but one of the mechanism programmes submitted by the Member States. The territorial just transition plans had to include a description of the transition process at the national level and a demonstration of a negative impact at the level of the territory by 2030 or earlier. Without a demonstration of the transition process, the Commission services could not proceed with the adoption of the mechanism programmes. Implementation started only after adoption: the first mechanism project was selected in November 2022.
Since the mechanism includes resources from NextGenerationEU, a temporary recovery instrument with a limited time span, there is little time for the implementation of the mechanism. Where mechanism regions need support, the Commission provides comprehensive technical and advisory support through the Just Transition Programme’s ‘Groundwork’ call launched in February 2023, for example for: project identification and development and capacity-building for regional and local administrations; building governance mechanisms for territorial just transition plan implementation; ensuring stakeholder engagement and mobilisation; and deployment of awareness-raising campaigns or engagement in cross-border cooperation with other mechanism regions.
Additionally, the Commission will apply the ‘n + 3’ rule to decommit the amounts that have not been used for pre-financing or for which a payment application has not been submitted by 31 December of the third calendar year following the year of the budget commitments. In order to avoid decommitment at n + 3, managing authorities are already taking steps to launch calls and select projects.
Sustainable development goals
Contribution to the sustainable development goals
The mechanism and the Public Sector Loan Facility have not started to be implemented yet. Therefore, there are no examples to report.
| SDGs the programme contributes to | Example |
|---|---|
| SDG1 End poverty in all its forms everywhere |
X |
| SDG3 Ensure healthy lives and promote well-being for all at all ages |
X |
| SDG4 Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all |
X |
| SDG5 Achieve gender equality and empower all women and girls |
X |
| SDG7 Ensure access to affordable, reliable, sustainable and modern energy for all |
X |
| SDG8 Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all |
X |
| SDG9 Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation |
X |
| SDG10 Reduce inequalities within and among countries |
X |
| SDG11 Make cities and human settlements inclusive, safe, resilient and sustainable |
X |
| SDG12 Ensure sustainable consumption and production patterns |
X |
| SDG13 Take urgent action to combat climate change and its impacts |
X |
| SDG15 Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss |
X |