Not all member states will benefit from the European Green Deal

The Just Transition Fund should be the linchpin of the EU's climate strategy and should help bring on board some of the more stubborn countries, such as Poland, where coal plays a significant role for their region's respective economies. [Shutterstock]

The wide-ranging European Green Deal provides for a European fund for a just transition, which is meant to support regions that are economically highly dependent on fossil fuels. But not all member states will benefit from it. EURACTIV France reports.

On 14 January, the European Commission unveiled the architecture of its Green Deal to accompany Europe’s energy transition.

The Green Deal is European Commission President Ursula von der Leyen’s flagship project with a delicate mission to financially support the continent’s energy transition and achieve carbon neutrality by 2050. And to bring on board the lesser developed countries, such as Poland, by proposing a compensation fund for ultra-carbon-dependent regions.

A financing plan that remains far off-target

While the European Green Deal promises to provide €1,000 billion in funding over ten years – or €100 billion a year – public money will still be a relatively small part of the architecture planned by the Commission.

The Commission will be taking into account several sources of funding to reach this figure. The first and main source will be the European budget, 25% of which will have to contribute to the ecological transition objectives.

In practice, this means that around €500 billion from the Common Agricultural Policy, Cohesion Policy, or Horizon 2020 research programme will have to go ‘green’. The Commission also hopes that European countries will invest an additional €100 billion through the Cohesion Policy’s co-financing obligation.

But if the budget is to be ‘greened’ it will have to survive budgetary negotiations between member states, which are currently deadlocked.

Once the UK withdraws from the EU, European finances will be under pressure, and for the moment, there is no consensus on the amount of the next budget for the 2021-2027 period.

The battle of numbers that will shape EU’s future

It might not be the sexiest debate but how the EU will look in the next seven years will depend on the outcome of one of the toughest upcoming fights in 2020: the negotiation over the bloc’s next long-term budget. 

The European Green Deal also includes the so-called ‘Invest EU’ investment plan, which is the successor to the Juncker plan, and rallies all European financing tools under a single banner from 2018.

The investment mechanism has “only” €15.2 billion from the European budget at its disposal, but aims to raise an additional €650 billion in investment, €300 billion of which will be channelled into green projects.

A final tool is the Just Transition Fund, which will provide new money (€7.5 billion) to finance projects in regions dependent on fossil fuels. In total, the EU hopes to mobilise €100 billion through this mechanism.

The European Green Deal’s funding comes, in large part, from the budgets being redirected towards the energy transition. “This obviously does not represent the full financing needs, which are estimated at €260 billion of additional investment by the European Commission,” said a Commission source.

Convincing Poland

The Just Transition Fund should be the linchpin of the EU’s climate strategy and should help bring on board some of the more stubborn countries, such as Poland, where coal plays a significant role for their region’s respective economies.

“There are certain regions that immediately come to mind when we talk about the Just Transition Mechanism,” the EU Commission acknowledged.

One such region is Silesia in Poland.

But the country that has refused to commit to carbon neutrality will have to make compromises. French President Emmanuel Macron has stated that funds for the energy transition will not be released if Warsaw does not adhere to the European objective.

No EU funds for Poland if climate goals aren’t agreed, Macron warns

Poland would not be eligible for funds available under the European Green Deal if it does not sign up to the EU’s climate objectives, French President Emmanuel Macron warned at the closure of an EU summit on Friday (13 December).

Another obstacle for Poland is access to the Cohesion Fund, one of the main sources of funding for this green pact. Member states and the European Commission want the use of these funds to be made conditional on respect for the rule of law.

That could hinder access for Poland, which has been in Brussels’ firing line over its reforms of the judiciary.

What about other regions?

Yet the issue of which other regions could benefit from the fund remains unanswered.

“The question of whether to allocate large envelopes to a small number of regions or smaller envelopes but in favour of more regions will have to be decided,” a source told the Commission, adding that “there is no guarantee that all countries will benefit”.

The selection criteria proposed by the European Commission will be based on the emission levels of the regions, the dependence of employment on emitting industries and the prosperity of the geographical area.

Nuclear power will not be affected, as the closure of plants is not a priority as far as carbon emissions are concerned.

With such criteria, it would thus seem unlikely that French regions will be able to benefit, but regions from member states such as the Czech Republic or even Germany could be considered.

The selection of eligible regions should take place before the end of 2020, although the Commission is expected to propose a number of potentially eligible regions to member states as early as February. It would then be up to member states to convince the Commission to add other territories to the list of eligible regions.

(Edited by Benjamin Fox)

EU Central Bank should step up its climate act, French MEP says

In an interview with EURACTIV France, socialist MEP Pierre Larrouturou deplored the meagre €7.5 billion proposed in the European Commission’s Just Transition Fund. To finance EU climate action, he suggests some of the ECB’s “easy money” could fuel the European Investment Bank (EIB) instead of going into private banks.

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