Rationale and design of the programme
The Just Transition Mechanism (JTM) was 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 and within the framework of cohesion policy (for pillars I and III), the main EU policy instrument to reduce regional disparities and to address structural change in Europe’s regions.
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 (JTF). The second is the dedicated just transition scheme under InvestEU. The third is the Public Sector Loan Facility (PSLF).
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 available resources.
The mechanism will contribute to a wide range of measures designed to promote public investment to foster sustainable development in the regions. 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 (TJTPs).
The beneficiary territories to be supported by the mechanism have been identified in one or more TJTP, providing an outline of the transition process until 2030, which have been submitted by the Member States (and approved by the European Commission). 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. By the end of 2023, all 27 Member States had their Tats adopted by the European Commission.
The JTM has three pillars. The first is the JTF. The second is the dedicated just transition scheme under InvestEU. The third is the PSLF.
According to the JTF regulation, only areas identified for support in the TJTP included in the adopted programmes can receive support from pillar I, amounting to EUR 19.3 billion. It is implemented through shared management in close cooperation with national, regional and local authorities and stakeholders. This ensures ownership of the transition strategy and provides the tools and structures for an efficient management framework. The Directorate-General for Regional and Urban Policy leads on behalf of the Commission. The JTF 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 TJTP.
The second pillar of the mechanism is the dedicated just transition scheme under InvestEU and followed by Directorate-General for Economic and Financial Affairs. A portion of financing under InvestEU will focus on just transition objectives to support economically viable investments by private and public sector entities. The investments must be located in or be key to a JTM area and aligned with the just transition outlined in the relevant TJTP. Investment projects potentially eligible under the second pillar can have access to the InvestEU Advisory Hub and receive advisory support from the European Investment Bank.
The third pillar, the PSLF, consists of a combination of grants from the EU budget (up to EUR 1.3billion (1)) and loans provided by the European Investment Bank (up to EUR 10 billion). 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.
(1) Allocation revised, see Council Regulation (EU, Euratom) 2024/765 of 29 February 2024.
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.
Reports adopted:
- Report from the Commission to the European Parliament and the Council on the implementation of the Public Sector Loan Facility under the Just Transition Mechanism in 2022, as referred in Article 16 of Regulation (EU) 2021/1229
- Report from the Commission to the European Parliament and the Council on the implementation of the Public Sector Loan Facility under the Just Transition Mechanism in 2023, as referred in Article 16 of Regulation (EU) 2021/1229
Budget
Budget programming (million EUR):
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Financial programming:
+ EUR 198.3 million (+ 2%)
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.
Explanation of the legal basis
Regulation (EU) 2021/1056 establishing the JTF was adopted in 2021, together with Regulation (EU) 2021/1229 on the PSLF under the mechanism. To help Member States in drafting their TJTPs, the Commission published staff working document SWD(2021) 275.
Budget performance – implementation
Cumulative implementation rate at the end of 2023 (million EUR):
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Voted budget implementation (million EUR) (*):
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Pillar I – the Just Transition Fund
By the end of 2023, the Commission adopted all JTF programmes submitted by the Member States. These include 70 TJTPs, which support 96 different territories. The implementation phase started directly after the mechanism programmes were adopted.
The TJTPs 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 JTF programmes. The identification of the places most affected by the climate transition, the acceleration of the coal phase-out, and the discussion on just transition in the context of carbon-intensive industries would not have happened in the same way without the JTF. It is an emblematic example of place-based policy and instrument, the importance of which has been emphasised in the context of the war in Ukraine and forthcoming challenges. This model can also provide inspiration for similar initiatives.
The budget of the JTF consists of resources coming from the multiannual financial framework and from NextGenerationEU. The latter is a temporary recovery instrument, financed by borrowing on international capital markets, and has a limited time span: all NextGenerationEU resources (including for JTF) need to be paid out at the programme level by the end of 2026. Instead, JTF multiannual financial framework resources have a spending deadline of 2029 57% of the JTF comes from the NextGenerationEU budget creating spending pressure. Combined with delayed adoption of all 2021-2027 cohesion policy programmes (including the JTF) due to the COVID-19 pandemic, the war in Ukraine and the energy crisis, the current level of implementation of the JTF is low.
DG Regional and Urban Policy monitors the JTF implementation on regular basis (implementation issues, selection rate, total net payment rate, EU allocation etc.). The impact of JTF in achieving its objectives will be evaluated in the midterm review exercise in 2025. On the side of Member States, monitoring committees established in the JTF territories monitor the implementation. They are composed of managing authorities and other types of stakeholders (non-governmental organisations, social partners, etc.).
As of the end of 2023, the Member States have selected operations amounting to 6.1% of their JTF allocation (EUR 1.6 billion). The implementation landscape varies noticeably among Member States, with six having selected operations for more than 20% of their allocation. As of 8 February 2024, total net payments (including pre-financing) of EUR 265 million were paid out (1.4% of the JTF allocation). While the overall selection rate is not high, it has shown steady progress. For example, the rate has doubled between the reporting of the Member States in October and December 2023 and for five Member States the rate is more than 30%, showing that a timely start is possible.
Pillar II – Just transition scheme under InvestEU (under the lead of DG Economic and Financial Affairs)
To implement pillar II under the JTM, a dedicated just transition scheme under the InvestEU programme is established to support investment to benefit the territories identified in TJTPs. The scheme focuses on economically viable investments aligned with just transition objectives. By the end of 2023, the European Investment Bank has not reported any advisory support provided to projects explicitly referring to the second pillar as potential future source of financing. The situation shall improve in 2024.
Pillar III – the Public Sector Loan Facility
The first call for proposals was launched in July 2022, when sufficient number of TJTPs had been adopted. The call has three cut-off dates per year and will remain open until 2025. A second call for proposals will be launched in 2026. The first grant agreement was signed in October 2023 to support Western Macedonia in its transition away from carbon intensive activities, such as lignite mining and its combustion in coal-fired power plants. Under the agreement, the PSLF offers a grant worth EUR14.5 million, which the European Investment Bank complements with a loan of EUR 58 million. The project will support financing sustainable investments worth EUR 80.7 million in total. In line with the European Council conclusions of 1 February 2024, and subject to the revised multiannual financial framework regulation (2), the Commission has submitted a proposal for a regulation on reallocations affecting indirectly managed instruments, including PSLF, as of 2025 (3).
(2) Council Regulation (EU, Euratom) 2024/765 of 29 February 2024.
(3) Proposal for a Regulation of the European Parliament and of the Council amending Regulations (EU) 2021/522, (EU) 2021/1057, (EU) 2021/1060, (EU) 2021/1139, (EU) 2021/1229, and (EU) 2021/1755 as regards the changes to the amounts of funds for certain programmes and funds.
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):
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Cohesion policy uses a categorisation information system to capture information on the thematic content of the 2021-2027 programmes. These multiannual thematic allocations are used to calculate the indicative share of investments under each annual commitment, as set out above. There are several tracking tools (e.g. climate, biodiversity, clean air, gender, digital).
The allocations to the various green budgeting objectives overlap to some extent. The amounts for each priority should not be directly aggregated, as that would result in double counting. Data stories on the Cohesion Open Data Platform present the data and the methods for tracking in more detail; see for example the climate tracking data story available on the platform.
In relation to the EU taxonomy of sustainable activities, the JTF directly helps to deal with the negative social, economic, environmental, demographic and health impacts of the climate transition. While all Member States can benefit from the JTF, funding is targeted at those regions most negatively affected by the transition towards climate neutrality. For these reasons the JTF is considered under climate tracking using a 100% climate coefficient for all allocations under the intervention fields.
Taking a more conservative approach in relation to the JTF assessment under the taxonomy for sustainable activities, we have used the cohesion policy funds system of 182 intervention fields, which have undergone an analysis of alignment with the taxonomy in the context of NextGenerationEU green-bond reporting. As a result of that analysis, groups of intervention fields were assessed as ‘fully aligned’, ‘substantially aligned’/’partially aligned’ or ‘not covered’. This system is used under cohesion policy shared management as an alternative to project-based analysis, not least because of the burden of assessing tens of thousands of projects over a programme period. When applying the results of this assessment to the 2021-2027 JTF budget, the following financial amounts can be reported: EUR 4 billion is ‘fully aligned’, EUR 1.8 billion is ‘substantially/partially aligned’ and EUR 13.8 billion is ‘not covered’ (these are primary interventions to support economic diversification and the reskilling of workers).
In addition to climate tracking, the ‘do no significant harm’ principle was also applied by the managing authorities in the assessment of the investment priorities contained in the programmes before adoption. Member States are responsible for the implementation of this principle throughout the programming period. As part of programme implementation, managing authorities can define specific criteria for selecting operations to ensure compliance with the principle.
The JTM was launched with the objectives 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 JTM 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 JTF will support, for example, sustainable productive investments in small and medium-sized enterprises, the creation of new firms, environmental rehabilitation, investment in clean energy, the upskilling and reskilling of workers, job-search assistance, the active inclusion of jobseekers’ programmes and the transformation of existing carbon-intensive installations, when these investments lead to substantial emission cuts and job protection. The JTF and the partnership principle embedded in cohesion policy gave impetus to debates across Europe about phasing out coal and preparing for this process, to prevent anyone being left behind. Thanks to the JTF, several Member States that did not have a specific plan to phase out coal have now committed to a specific timeline and accompanying measures.
By addressing the investment needs of the territories that are most negatively impacted by the transition towards a climate-neutral economy, the PSLF will provide a key contribution to mainstream climate action. It covers a wide range of sustainable investments, including in relation to biodiversity, provided that such investments contribute to meeting the development needs of territories that are 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 TJTPs. The PSLF is implemented by a call for proposals. Therefore, its final contribution to climate, biodiversity and clean air is subject to the applications and to the support it receives
Gender
Contribution to gender equality (million EUR) (*):
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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.
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Digital
Contribution to digital transition (million EUR):
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Addressing the impacts of the transition towards a climate-neutral economy also means digitalisation. In 2023, more than EUR 950 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
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Link to file with complete set of EU core performance indicators
By the end of 2023, the Commission had adopted all JTF programmes submitted by the Member States. In total, 96 regions, involving all of the Member States, are receiving support from the fund through 70 plans. With the adoption of all TJTPs by December 2023, the programming of the JTF has been completed, and efforts are now focusing on implementation. The TJTPs 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 JTF programmes.
Since the JTF includes resources from NextGenerationEU, a temporary recovery instrument with a limited time span (all NextGenerationEU resources need to be paid out at the programme level by the end of 2026), there is little time for its implementation. Where just transition regions need support, the Commission provides technical and advisory support through the JTP under the technical assistance schemes JTP groundwork and JTPeers exchange, launched in February 2023, for example for project identification and development, and capacity-building for regional and local administrations; building governance mechanisms for TJTP implementation; ensuring stakeholder engagement and mobilisation; and deployment of awareness-raising campaigns or engagement in cross-border cooperation with other transition regions.
Additionally, the Commission will apply, for pillar I, 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. To avoid decommitment at n + 3, managing authorities are already taking steps to launch calls and select projects. Thanks to the Strategic Technologies for Europe Platform allowing Member States to make use of a one-off increase in pre-financing (30%) for the priorities dedicated to the platform’s objectives, the decommitment risk can be further reduced. This pre-financing will in fact apply to all JTF resources automatically, given the strong links of the fund with Strategic Technologies for Europe Platform objectives. The Commission will disburse EUR 5.9 billion in JTF pre-financing and will thus provide managing authorities with greater liquidity and flexibility for project implementation, without a need for programme amendment.
Concerning the PSLF, its first call for proposals was launched in July 2022. Due to the early stage of implementation of the facility, it is not yet possible to report about the specific results of projects. However, the first grant was signed in October 2023 for an amount of EUR 14.5 million. Additional projects have been selected for funding by the European Commission for an amount representing up to EUR 118.3 million, and their corresponding grant agreements will be signed once the European Investment Bank confirms its intention to provide loans for these projects. More projects are currently under assessment and are expected to be submitted in time for the next submission deadlines of the facility’s call for proposals. In line with the PSLF regulation, its impact will be evaluated in a midterm evaluation by mid 2025 and a final evaluation by the end of 2031, in particular regarding the extent to which the facility contributed to environmental objectives. PSLF-supported projects are monitored by the European Climate, Infrastructure and Environment Executive Agency. The regulation includes key performance indicators on the number of projects supporting environmental objectives and greenhouse gas emission reductions.
Coherence between the JTF and the PSLF, two pillars of the JTM, is first and foremost ensured through the TJTPs, which indicate how the Member States intend to make use of both pillars in the eligible territories. As the three pillars of the JTM support the same territories, synergies are expected to emerge between the pillars’ respective investments when implementation is more advanced. At this point, there have been synergies in the field of awareness raising / communication (both pillars discussed during JTM media trips) and technical assistance (support from the European Investment Bank’s joint assistance to support projects in European regions programme for the development of the project pipeline for JTF screening projects that could be submitted to the PSLF).
Sustainable development goals
Contribution to the sustainable development goals
The PSLF does not have quantitative data to share yet, the implementation period of its first project only started in October 2023.
| SDG | Example |
|---|---|
| SDG1 End poverty in all its forms everywhere | No poverty: In Romanian counties: Dolj, Galaţi, Gorj, Hunedoara, Mureş and Prahova, the JTF’s support of EUR 2.14 billion will invest in renewable and clean energy technologies, such as hydrogen, to combat energy poverty. |
| SDG3 Ensure healthy lives and promote well-being for all at all ages | Good health and well-being: In Romania, the JTF will support, for example, the rehabilitation of brown fields in the mining sector and the rehabilitation of abandoned industrial sites by creating new green spaces contributing to well-being of citizens (such as parks, commercial and residential areas for social housing). |
| SDG4 Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all | Quality education: One of the main goals of JTF investments is to support workers in the coal and carbon intensive industries with extensive training programmes for up- and reskilling to the new green sectors and to be prepared for the economic diversification planned for the regions. In Czechia, in the Karlovarsky region, over 1 000 jobs are related to polluting power generation activities. It is the least developed region in Czechia but has a potential for the development of small and medium businesses. To make sure the industrial transition in this region is benefitting everyone, the JTF will support entrepreneurs by helping to re- and upskill workers. In Poland, in the Silesia region, the JTF will invest in the training of 100 000 workers many of whom currently work in the fossil fuels sector and equip them with new skills to work in renewable and climate neutral industries. 27 000 new jobs are expected to be created in Silesia directly as a result of the measures. In the Wielkopolska region, the JTF is to support training and reskilling activities for 5 500 workers in the lignite industry. |
| SDG5 Achieve gender equality and empower all women and girls | Gender equality: The TJTPs often make reference to women’s lower participation in the labour market and point to the need for quality childcare services. The TJTPs of Greece, for example, includes investments in infrastructure to enable childcare services and elderly care. A large part of the funds (20.4% of the total EUR 1.63 billion) will strengthen human resources and the skills of the workforce in the areas most affected by the transition process and promote employment as well as skilling-upskilling-reskilling, for example among women. |
| SDG7 Ensure access to affordable, reliable, sustainable and modern energy for all | Affordable and clean energy: In Poland, to help reduce energy bills and to allow citizens to benefit from stable, ecological, and affordable energy sources, the JTF will invest in Western Małopolska in the energy efficiency of public buildings and of housing, including by supporting home insulation, rooftop solar installations, and heat pumps. The JTF invests EUR 2.4 billion in Silesia and Western Małopolska. In Czechia, the Moravskoslezsky region (the biggest coal-mining region) faces several challenges related to the environment, especially air pollution, and groundwater contamination due to industrial activities. The JTF will therefore invest in decontamination and support the region's coal phase-out. Investments are planned in the area of energy storage and energy research. Czechia will receive EUR 1.64 billion for JTF. In Greece, the PSLF will support the Western Macedonia region to increase energy efficiency of public infrastructure, to reduce energy cost, using low consumption lamps (LED) for road lighting, and to increase solar energy production. |
| SDG8 Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all | Decent work and economic growth: In Czechia, in Ustecky region, 80% of Czechia's lignite (or brown coal) is extracted. There are over 5000 coal-related jobs, four coal mines, the largest Czech coal fired power plants and a high concentration of chemical industry firms. The JTF will support investments to transform the economy into one based on renewable energy sources and a circular economy. |
| SDG9 Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation | Industry, innovation and infrastructure: In Austria, JTF will create employment and mitigate job losses linked to the green transition. This will be done by investing EUR 76 million in the development of new business models and sustainable green business areas proactively accompanying companies in their transition process. JTF will finance advisory services to local small and medium-sized enterprises and start-ups (incubation, acceleration, related infrastructure investments) and local start-up ecosystems. This includes strengthening already established incubators, building new incubation capacities with a focus on green business models, and improving access to incubation capacities (e.g. in cooperation with tertiary education and research institutions). In Belgium, the fund will allocate around EUR 14 million for research and innovation activities. |
| SDG10 Reduce inequalities within and among countries | Reduced inequalities: JTF has been launched to leave no-one behind and tackle inequalities in EU regions most hardly hit by the transition towards climate-neutrality. In 27 Member States, the JTF will support particularly the most impacted workers and regions by investing in new job opportunities, training and skilling for workers and their families to benefit from the economic diversification that will be offered by renewables and modern businesses and industry. |
| SDG11 Make cities and human settlements inclusive, safe, resilient and sustainable | Sustainable cities and communities: In Belgium, three cities Tournai, Mons, and Charleroi will receive JTF support to be more sustainable and move towards clean energy production, namely by the replacement of fossil fuels by renewable hydrogen and biomethane. EUR 40 million will be dedicated to renewable energy, and about EUR 68 million to energy efficiency. |
| SDG12 Ensure sustainable consumption and production patterns | Responsible consumption and production: In Romania, the JTF will support with EUR 2.14 billion economic diversification by financing the establishment of small and medium-sized enterprises in sectors that promote responsible consumption and production, for example, circular economy, traditional activities like crafts, or the production of environmentally friendly construction materials. |
| SDG13 Take urgent action to combat climate change and its impacts | Climate action: 27 Member States are supported by JTF to mitigate socio-economic consequences of transition process towards climate-neutrality. For instance, in Poland EUR 3.85 billion under the JTF is to support a just climate transition in the coal regions of Silesia, Małopolska, Wielkopolska, Lower Silesia and Łódzkie. |
| 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 | Life on land: In Silesia, Poland, the investments made with support of JTF are to restore environmental damage from the mining activities. The JTF will also invest in rehabilitation and decontamination of 2 800 ha of post mining areas in line with the polluter pays principle. |