Just Transition Fund

Introduction and Overview

The Just Transition Fund (JTF), established by Regulation (EU) 2021/1056, is a key financial instrument of the European Green Deal. Its primary purpose is to provide targeted support to the people, economies, and environments of territories facing significant socio-economic challenges due to the transition towards the EU's 2030 climate and energy targets and a climate-neutral economy by 2050. The JTF is the first pillar of the Just Transition Mechanism and aims to ensure that the transition towards a green economy is fair and leaves no one behind.

Evolution and Relation to Other Laws

The JTF is an integral part of the EU's cohesion policy and operates under the Common Provisions Regulation (EU) 2021/1060 for the 2021-2027 period. It is a core component of the Just Transition Mechanism, which also includes a dedicated scheme under InvestEU (Pillar 2) and a public sector loan facility with the European Investment Bank (Pillar 3).

The Regulation is directly linked to the EU's overarching climate goals, as defined in Regulation (EU) 2018/1999 on the Governance of the Energy Union and Climate Action. Its implementation must be consistent with Member States' National Energy and Climate Plans (NECPs).

The fund has been amended, notably by Regulation (EU) 2024/795, to incorporate support for investments contributing to the objectives of the Strategic Technologies for Europe Platform (STEP), linking the just transition to the EU's strategic autonomy and technological leadership goals.

Main Goal and Objectives

The specific objective of the JTF is to enable regions and people to address the social, employment, economic, and environmental impacts of the climate transition. This involves mitigating the negative repercussions, such as job losses in carbon-intensive sectors, and harnessing new opportunities for sustainable economic development and job creation.

Who It Applies To

The JTF applies to all EU Member States. However, the support is geographically concentrated on the territories most negatively affected by the transition. These territories are identified by Member States in their Territorial Just Transition Plans (TJTPs). The ultimate beneficiaries are:

• Workers and jobseekers in affected regions, through upskilling, reskilling, and job-search assistance.
• Small and Medium-sized Enterprises (SMEs), start-ups, and new firms through productive investments to diversify the local economy.
• Local communities and citizens, through investments in clean energy, social infrastructure, and environmental regeneration.
• Public authorities managing the transition process.

Key Dates and Timeline

• Adopted: 24 June 2021
• Published in Official Journal: 30 June 2021
• Entered into Force: 1 July 2021
• Funding Period: 2021-2027
• Last Updated: 29 February 2024 (by Regulation (EU) 2024/795)

Exemptions and Exclusions

Article 9 explicitly excludes the following activities from JTF support:

• The decommissioning or construction of nuclear power stations.
• The manufacturing, processing, and marketing of tobacco and tobacco products.
• Support for an undertaking in difficulty (with certain exceptions under temporary State aid rules).
• Investment related to the production, processing, transport, distribution, storage, or combustion of fossil fuels.

Key Provisions and Requirements

Territorial Just Transition Plans (TJTPs)

This is the cornerstone of the JTF. To access funding, each Member State must prepare one or more TJTPs in collaboration with local and regional partners. These plans must:

• Identify the territories most negatively affected by the transition.
• Outline the transition process and timeline until 2030.
• Assess the social, economic, and environmental challenges.
• Describe the types of operations and investments envisaged.
• Ensure consistency with NECPs and other relevant strategies.

Scope of Support

The JTF supports a wide range of activities (Article 8), including:

• Productive investments in SMEs to foster economic diversification and modernization.
• Creation of new firms and business incubators.
• Research and innovation activities.
• Deployment of technology for affordable clean energy, renewable energy, and energy efficiency.
• Investments in the circular economy, such as waste prevention and recycling.
• Upskilling and reskilling of workers and jobseekers.
• Regeneration and decontamination of brownfield sites.
• Investments in sustainable local mobility and digital connectivity.

Conditional Access

Full access to JTF resources is conditional. A Member State that has not committed to the national objective of achieving climate neutrality by 2050 can only program 50% of its allocated funds (Article 7).

Affected Products, Actors, and Processes

• Actors: Workers in carbon-intensive industries (coal, lignite, oil shale), SMEs, start-ups, public research organizations, local and regional authorities.
• Processes: Economic diversification, industrial reconversion, workforce retraining, energy system transformation, land rehabilitation, and circular economy implementation.

Penalties and Enforcement

The Regulation includes mechanisms for enforcement:

• Financial Corrections (Article 13): The Commission can apply financial corrections if a programme achieves less than 65% of the target for its output indicators, unless the failure is due to external factors.
• Conditional Funding (Article 7): As mentioned, 50% of a Member State's allocation is withheld until it commits to the 2050 climate neutrality target.