A fund originally conceived to convince Poland to sign up to the EU’s 2050 climate target has now turned into one of the most contentious aspects of both the Green Deal and the long-term EU budget.
During the course of last year, as EU leaders failed to get unanimous agreement for a 2050 decarbonisation target at summit after summit, EU officials came up with an idea to get all countries on board.
They understood that for member states heavily reliant on coal like Poland and Germany, signing up for such a society-changing vision was going to result in a big impact for certain regions.
The socio-economic impacts of the transition came more and more in focus as policy-makers watched the 2018-2019 ‘Yellow Vest’ backlash protests against a green tax in France. Ensuring a “just” transition became the new buzz word in Brussels – even if the concept had first been developed by trade unions 20 years ago.
The idea is to help workers and regions dependent on sectors of the economy like coal mining, which will be phased out under the green deal, transition to new areas of economic activity.
When a just transition fund was put on the table in the Autumn, a much larger and more expansive version of the “coal regions in transition” platform launched in 2017, it managed to end the threatened vetoes of Hungary and the Czech Republic.
But Poland, the country for which the fund was designed, still refused to relent. In the end, the European Council had to adopt the target without Poland.
It was a Pyrrhic victory for Polish Prime Minister Mateusz Morawiecki, because whether or not he signs the non-binding Council conclusions, Poland will still have to abide by the implementing legislation for the target unveiled by the European Commission on 4 March, assuming it is adopted by a qualified majority of member states.
Now, if a retaliatory budget amendment on conditionality is passed in the next budget, it looks like Morawiecki’s symbolic veto on unanimity could cost Poland half the amount of money it is eligible for from a fund that was designed for his country in the first place.
National capitals blocking regions
Under the terms of the just transition mechanism proposed by the European Commission in early January, Poland and Germany would be eligible for the largest slices of €7.5 billion fund. Without factoring in Morawiecki’s 50% punishment, Poland would receive €2 billion while Germany would get €877 million under the proposal.
Last week, as part of its country-by-country reporting under European Semester budgetary oversight, the Commission revealed a list of 100 regions that will be eligible for funding.
These regions meet criteria based on carbon-intensive jobs, fossil fuel industrial activity and GDP per capita. Germany has the most eligible areas with 18, mostly in the east of the country. Nine Polish regions will be eligible, while Italy and France have two eligible regions each.
But already there are concerns that regional governments’ access to the funding will be blocked by national capitals, and there is little they can do about it. Last week, at an event presenting a new report from environmental campaign group WWF on how to dole out the cash to the regions, local officials complained that the Commission’s reliance on national governments to apply for the funding will jeapordise the regions’ access.
Jerzy Buzek, a Polish centre-right MEP who will author an opinion on the just transition fund legislation for the European Parliament’s industry committee, told the event that he agrees with the principle that a country which has not signed up to the 2050 target should not be eligible for the funds.
“It’s very difficult to say that somebody who refuses to be in this European project should have the same support as others. From my perspective, in order to receive money it’s necessary to be in, not out, of the whole agenda.”
Skip the middle man, says Polish mayor
But Michal Bieda, deputy mayor of the Polish town of Bytom, said that regions should not be punished for decisions taken by the national government.
“People should not be punished for government’s lack of perspective. I would ask that the Commission distributes the money not to countries but to regions,” he said.
“If the regulation stays as it is with the countries distributing the money, and the 50% cut is done, I would ask the Commission to set this money aside in the fund and open a call for Polish towns to be able to apply for it.”
Bieda said he made this suggestion to Frans Timmermans, the Commission’s Executive Vice President for the Green Deal, in February. “I suggest that the Commission considers skipping the middle man. We have 50 coal regions in the EU. That’s 150 regions maximum. How hard can it be to sit with every one of these and discuss the plan?”
Greek MEP Petros Kokkalis agreed that regions need to be more involved in the fund’s planning. “The only way to avoid what happened in France with the yellow vests is to have broad social acceptance,” he said. “I’m not at all in favour of a top down national or European plan for a European region, I think it’s completely the wrong way to go.”
Market forces, not politics are driving coal phase-out
Aleksandra Tomczak, a policy coordinator on coal issues in the Commission’s energy department, said that while she think it’s important to involve local authorities, the time constraints for devising the fund might not allow it.
“The involvement of mayors is important, but it’s going to be a huge challenge,” she cautioned. “We’ve asked that territorial just transition plans are prepared before 2021. That gives us ten months. We want National and regional authorities to consult with municipalities as much as possible, but at the same time they only have ten months.”
Tomczak, who previously worked at the World Coal Association, noted that she has a personal reason for ensuring the just transition mechanism is a success since she comes from one of the affected regions in Poland.
She said one of the most important tasks will be to communicate to people that the fund isn’t being necessitated by the 2050 target or the green deal – it’s a response to market forces that are going to happen no matter what.
“We need to make people understand that this is not a purely political decision, this is an economic reality – it is unlikely that any coal mining in Europe will be economically viable in 2050, and we want to avoid that communities will be squeezed out of this economic transition.” she said.
“Taxpayers money is right now being used to keep these coal assets alive, in Bulgaria and Romania and to some extent in Poland. So now we have to use these finances in a more clever way to finance a just transition rather than going into a brick wall.”
Four case studies
The WWF report reviewed four case study coal regions in Poland, Germany, Greece and Bulgaria and found that even though each region is different, the challenges they face in transitioning are similar. Based on the research, the report concludes that setting a phase-out date is crucial to send the right signal to both companies and local authorities.
Generous financial support will not be enough. In Germany’s Ruhr valley, for instance, “subsidies implemented without foresight or in conjunction with a transition plan cemented the existing structures and working conditions.”
The report recommends two key expenditures that will be crucial for making the fund a success: infrastructure and education. “Young people are drawn to universities – and new structures are created around them,” the report concludes.
A feedback period for the Commission’s just transition fund proposal will end on 12 March. But the final form of the fund will not be known until the EU’s 27 national leaders can reach on agreement on the next long-term budget for 2021 to 2027.
[Edited by Frédéric Simon]