On Thursday, 28 May, the European Commission presented the third pillar of the Just Transition Mechanism, namely the public sector loan facility, which is expected to raise between €25 billion and €30 billion in public investments over the next budget cycle, according to the institution’s projections.
“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,” said Vice-President Valdis Dombrovskis on the occasion.
In concrete terms, the operation of this facility remains very similar to the provisional version that EUROPE obtained (see EUROPE 12489/11): it aims to invest in the European territories most affected by climate transition based on the territorial just transition plans to be prepared for the purposes of the Just Transition Fund (see EUROPE 12403/1).
This facility therefore includes a grant component, approximately €1.525 billion, and a loan component, €10 billion from the European Investment Bank. The grant, financed from the European budget (€1.275 billion in assigned revenue and €250 million from budgetary resources under the 2021–2027 MFF), aims to reduce the financial burden for beneficiaries due to the repayment of the loan that will be provided by a financial partner.
The institution explains that while the grant component is intended to be implemented with the European Investment Bank (EIB), the possibility of cooperation with other financial partners is also provided for in order to explore other modalities of cooperation in the event of a possible future increase in the European Union’s resources or in the event of specific implementation challenges.
It should be noted that the amount of the grant shall not exceed 15% of the amount of the loan granted by the finance partner under this facility. However, grant rates for projects promoted by public entities in the least developed regions (those whose GDP per capita is less than 75% of the EU’s average GDP) may be as high as 20% of the loan.
“Support under this Facility should only be provided to projects that do not generate a sufficient stream of own revenues that would allow them to be financially viable and to be financed solely by loans provided on market terms,” explains the institution.
The sectors targeted are primarily: energy and transport infrastructures; district heating networks; public transport; energy efficiency measures, including renovation of buildings; investments supporting transition towards circular economy; land restoration and decontamination; and training and social infrastructure.
Territorial just transition plans are being prepared by the Member States. The goal is to have them ready by January 2021, in parallel with cohesion policy programmes.
The proposal can be consulted here: https://bit.ly/36OmiwV (Original version in French by Pascal Hansens)