EU’s just transition ambitions face acid test

European Commission vice-president Frans Timmermans in Brussels, Belgium, 29 January 2020. [Photo: EPA-EFE/OLIVIER HOSLET]

This article is part of our special report Europe’s new Climate Law: Leaving no-one behind?.

The European Commission is due to release proposals Wednesday (4 March) to enshrine the EU’s goal of reaching climate neutrality by 2050 into hard legislation. But concerns remains over the size of a fund aimed at making the transition smoother for countries heavily dependent on coal and other polluting industries.

The EU executive has tabled a €7.5bn-strong Just Transition Fund to sweeten its Green Deal ambitions for EU countries reliant on fossil fuels.

Under a plan launched in January, the Commission has put together €100bn for member states to share over the next decade, although the lion’s share of that Just Transition Mechanism comes in the form of investments.

The pillar of the mechanism that has proved of most interest to national governments is the €7.5bn fund (JTF), which is comprised of what the Commission insists is fresh money. It has also decided how much each country should be awarded and which regions are eligible.

Areas heavily dependent on fossil fuel power generation, carbon-intensive industries like cement and steel, and transportation hubs are all on track to get a slice of the fund, pending approval of Just Transition Plans. Member states will compile those this year.

EU climate boss Frans Timmermans said at the launch of the plan that it is “a message to coal miners, peat farmers and oil shale workers” but acknowledged that the size of the money on offer is “just a start”.

The overall size of the fund has indeed come in for criticism. Luc Triangle, general secretary of trade union IndustriAll, said that “the €7.5bn, if we get it, because the negotiations are still ongoing, is peanuts”.

Question marks raised over scale of EU's new climate fund

The European Commission finally lifted the lid on its long-awaited just transition plans on Tuesday (14 January) but doubts have already been raised over the amount of funding on offer for the next decade compared to the bloc’s Green Deal ambitions.

Talks on the EU’s long-term budget, the multiannual financial framework, have stalled in the European Council. A summit in mid-February proved unsuccessful in paving way for an agreement.

That was largely because so-called net-payers like Austria, Denmark, the Netherlands and Sweden refused to shift from their demands to have a streamlined, smaller budget. Another summit this month is aimed at bridging the gap.

But the so-called ‘frugal four’ have positioned themselves at the sharp end of climate policy ambition at EU level and diplomats from those member states have confirmed to EURACTIV that a larger JTF would have been welcomed.

The Commission appeared to acknowledge its error at the February summit, when officials circulated a new budget calculation that pegged the fund at €7.8bn instead. Sectors like space policy and military mobility were stripped of cash during the reallocation.

EU leaders ultimately dismissed that calculation because of more pressing concerns but sources at the Council expect fresh talks this month to take into account the Commission’s willingness to funnel more cash into climate policy.

Polish MEP Jerzy Buzek (EPP), an early advocate of a just transition policy, has warned that “we need fresh, additional money… not to shift money from one part of the budget to another”.

It is likely though that given the positions of national governments, any further increases to the JTF will indeed come at the expense of other areas.

Nuts n’ bolts

The overall size of the JTF is an issue for Council and Commission heads to haggle over but more nuanced details like the cap on funding available and which countries are eligible are also on the table.

When Buzek proposed an ‘Energy Transition’ fund in late 2018, the idea was very much along the lines of beefing up an existing coal regions framework and targeting the funding towards Central and Eastern European countries.

The Polish lawmaker’s original plan was to set aside €5bn, so the increase in funding is an improvement, but the rest of the criteria have provoked disappointment in the likes of Poland, the Czech Republic and Bulgaria.

EU's 'just transition fund' gesture muddies budget waters

Europe’s fossil fuel-dependent regions could benefit from an additional €5 billion under the next EU budget, thanks to a proposal endorsed by the European Parliament. But it could complicate already complex talks with the Council, which is eager to cut future spending.

During the drafting phase of the fund, the Commission decided to extend the eligibility criteria from just 10 lower-income member states, which are covered by the Emissions Trading Scheme’s Modernisation Fund, to all 27 countries.

That was after governments in France, Germany, Italy and Spain all made it perfectly clear that they would not back a budget that allocated a fresh tranche of resources to a specific group of countries.

Final conclusions at an October EU summit even ditched all mention of the JTF after climate negotiations started to focus too much on energy-related needs. 

The Brief – The curious case of the missing fund

Last week’s EU summit devoted a paltry 10 minutes to climate change, as Brexit and enlargement dominated proceedings. But there was enough time for a little bit of intrigue: where did the Just Transition Fund go?

But the subsequent EU-wide  roll-out has prompted fears that the funding will not stretch far enough for those that need it most. Poland and the Czech Republic are set for a €2bn and €581m windfall but Germany and France are also €877m and €402m each.

Regional policy Commissioner Elisa Ferreira attempted to assuage worries during a trip to Warsaw, saying the plan “is more than a financial proposal”.

“It is a political recognition of the social and economic impacts of the transition. And it is Europe’s commitment to support the people and regions most affected by the transition.”

The Portuguese official added that “we will ensure that Poland benefits to the full, and that no region in Poland is left behind. We will rebuild, reskill and diversify the regions most dependent on fossil fuels.”

A new concern for Warsaw emerged at the last summit though when Council President Charles Michel hitched full JTF funding to a long-term plan that targets climate neutrality by 2050.

Countries that have not subscribed to the strategy will only be able to access 50% of their allocation. Poland is the only nation not on board and Prime Minister Mateusz Morawiecki was quick to denounce “political conditionality” as a poor negotiating tactic.

Morawiecki was happier with the way the Commission decided which countries should get what funding though, saying in January that the allocation under the wider mechanism “is good for Poland”.

Poland’s just transition bonus cut 50% under latest EU budget proposal

Poland would see its €2 billion share of the EU’s Just Transition Fund cut in half under a new EU budget proposal published on Friday (14 February), which penalises countries that have not signed up to the bloc’s 2050 ‘climate-neutrality’ goal.

Other names in the game

Jerzy Buzek will be in action again later this year, as he was chosen by the European Parliament’s industry and energy committee (ITRE) to helm its opinion on the proposal.

Greek MEP Manolis Kefalogiannis of the regional committee (REGI) will be the main rapporteur for the file though and the Cretan will give Athens a strong voice in the climate debate, which has been lacking so far.

According to VoteWatch.eu, Kefalogiannis’ voting record suggests that his stance on nuclear power could muddy the waters of the negotiations. His views align with the Commission’s on precluding it from funding but that is not a universal opinion among centre-right forces.

Nuclear 'excluded' from EU's new Just Transition Fund

The EU’s regional policy Commissioner Elisa Ferreira revealed on Tuesday (14 January) details of the €100 billion Just Transition Mechanism, a key financial component of the European Green Deal that should make the bloc climate neutral by 2050.

Bulgaria, for example, outlined its financial demands for the Green Deal last week and reportedly included the costs of constructing the Belene nuclear plant, estimated at around €10bn. Poland and Hungary are also firm advocates of atomic energy.

Although not an official part of the political wrangling, the European Investment Bank is also a major player to watch, as it will be responsible for managing around €30bn of the investments promised under the wider Mechanism.

As part of its Energy Transition Package agreed last year, the EIB has decided to up the top level of funding from 50% of costs to 75%. Stakeholders like Poland’s electricity association wants that generous increase reflected in the just transition package as well.

Further tweaks to the finer points of the proposal will likely have to wait until EU Council heads broker an MFF agreement or at least a partial deal to ringfence a certain amount for the JTF so talks can progress.

(Edited by Frédéric Simon)

Subscribe to our newsletters

Subscribe
Contribute