The President of the European Commission, Ursula von der Leyen, confirmed the presentation, scheduled for 14 January 2020, of the Just Transition Mechanism, including a Just Transition Fund, on the occasion of the presentation of her roadmap on the European Green Deal on Wednesday 11th December (see other news). However, few details on how the mechanism works and how it is financed have been provided.
“The mechanism will apply to the whole Union. The Fund will be for regions where there are specific transitional features. These can be coal mining regions, regions with a struggling industry, regions with specific social problems. It is not just coal mining regions”, explained Frans Timmermans, Vice-President of the Commission, at the European Green Deal, in response to EUROPE at a press conference.
This Mechanism could generate up to €100 billion of investment to mitigate the effects of the transition, with the support of the European Investment Bank.
There does remain the question of how to finance the Just Transition Fund where arbitrations will have to be made. One thing is certain, according to European sources, Cohesion Policy will be called upon.
What type of financing?
According to a series of documents seen by EUROPE, the European Commission is looking at a "5+5 billion" scenario: a budget of 5 billion euros on the next multiannual financial framework (MFF) 2021-2027 for the Just Transition Fund and 5 billion euros from the European Regional Development Fund and the European Social Fund plus.
In addition, national co-financing of €5 billion would be provided, as well as the use of a transversal financial product under the framework of the InvestEU Fund. Thanks to a specific guarantee of €1.5 billion, investments of around €20 billion could be mobilised.
In the end, the potential investment power of the Mechanism would reach 35 billion euros (see EUROPE 12386/13).
The Just Transition Fund – a boost to budget negotiations?
Some European observers consider that the Just Transition Fund could facilitate negotiations on the 2021-2027 MFF.
Firstly, the Fund could facilitate the acceptance of those cuts envisaged in Cohesion Policy among the net beneficiary countries of the EU budget. In particular, it could provide the Visegrád Group countries with the financial resources needed to help them ease an ecological transition, particularly in coal mining regions.
Secondly, the Fund would allow Member States, and in particular the so-called 'frugal' countries (Austria, Denmark, the Netherlands and Sweden), to be more inclined to increase their contribution to the next MFF beyond 1% of their GNI, since this expenditure would be used to finance future political priorities such as the fight against climate change.
“To find (a) compromise (on the MFF), I believe that redirecting some of the European funding to the Green Deal might convince those who have issues with it to accept a slightly higher budget. They will then be able to tell their fellow citizens: ‘maybe we are paying a little more, but now we can really move towards new policies’”, said Frans Timmermans, in response to a question from EUROPE. (Original version in French by Pascal Hansens)