According to a provisional version of the Regulation establishing the public sector loan facility under the Just Transition Mechanism, consulted by EUROPE on Monday 18 May, the instrument will be based on a €1.5 billion grant and a €10 billion loan provided by the European Investment Bank (EIB).
This facility, which is the third pillar of the Just Transition Mechanism (see EUROPE 12486/27), will support investments in the public sector through “preferential” funding conditions for the territories most negatively affected by the climate transition, as identified in the territorial just transition plans for the purposes of the Just Transition Fund.
It will, however, have a broader scope than the Fund and will go beyond the social impact of the transition by covering energy and transport infrastructure, district heating networks, energy efficiency measures as well as the renovation of buildings.
This facility will thus consist of a ‘grant’ and a ‘loan’ component. The grant, financed by the EU budget from assigned revenues, will reduce the financial burden on beneficiaries for the loan provided by the EIB.
Given that the EU budget will support this facility with €1.5 billion and the EIB will lend €10 billion at its own risk, the grant is expected to cover on average 15% of the loan, the Commission details.
Grant rates for less developed regions should be comparatively higher, according to the draft document, but should not exceed 20% of the loan. Less developed regions are those with a GDP per capita inferior to 75% of the average GDP of the EU27.
The public sector loan facility could mobilise between €25-30 billion of public investment over the period 2021-2027, the European Commission hopes.
It should be noted that the distribution of the grant portion will be subject to a national quota until 2024, established according to the same methodology as the national allocations of the Just Transition Fund. After 31 December 2024, the quota will no longer apply, according to the draft document.
In addition, the aid granted under the public sector loan facility will be complementary to the aid granted under InvestEU. While the latter instrument will aim to attract private investment, the public sector lending facility will focus on public investments that would be unsustainable without subsidies.
It should be noted that this is a provisional version and these figures could still move, although one source indicated that the text is stabilised.
To consult the provisional Regulation: https://bit.ly/2X9lw9e (Original version in French by Pascal Hansens)