The goal of the European Union's Green Deal investment plan unveiled on Tuesday is to help cut public and private sector investments enough to come up with at least €1 trillion for the overhaul of the European economy.
The EU has set a goal to become the first climate-neutral region by 2050. Those areas to be affected more by the transition will be faced with extensive economic and social changes, and the Just Transition Mechanism will provide tailored financial and practical support to help workers and generate the necessary investments in those areas, the European Commission said.
"We will support our people and our regions that need to make bigger efforts in this transformation, to make sure that we leave no one behind," President of the European Commission Ursula von der Leyen said, describing the transformation ahead as unprecedented. "The Green Deal comes with important investment needs, which we will turn into investment opportunities. The plan that we present today, to mobilize at least €1 trillion, will show the direction and unleash a green investment wave."
Under the European Green Deal Investment Plan, at least €1 trillion in sustainable investments will be made over the next decade. A greater share of spending on climate and environmental action from the EU budget than ever before will crowd in private funding, with a key role to be played by the European Investment Bank (EIB), the Commission said.
The EU will also provide incentives to unlock and redirect public and private investment. Sustainable finance will be placed at the heart of the financial system, providing tools and opportunities to investors.
The EU will also facilitate sustainable investment by public authorities by encouraging green budgeting and procurement, and by designing ways to facilitate procedures to approve state aid for just transition regions.
The Commission will also provide support to public authorities and project promoters in the planning, designing and executing of sustainable projects.
Support for fossil fuel-dependent regions
Targeted support will be provided via the Just Transition Mechanism (JTM) to ensure at least €100 billion over the 2021-2027 period to alleviate the socio-economic impact of the transition in the most affected regions.
The mechanism will generate the necessary investments to help workers and communities reliant on the fossil fuel value chain. Ida-Viru County in Northeastern Estonia is one such area.
The JTM will consist of three primary sources of financing.
First, a Just Transition Fund will be established to which €7.5 billion of EU funding will be allocated in addition to the Commission's proposal for the next long-term EU budget. In order to tap into this funding, member states, in cooperation with the Commission, will have to identify eligible territories through dedicated territorial just transition plans. They must also commit to matching every euro from the Just Transition Fund with money from the European Regional Development Fund (ERDF) and the European Social Fund Plus, as well as provide additional national resources. This will provide a combined €30-50 billion in funding.
The fund will primarily provide grants to regions, including to support workers in developing skills and competences for the job market of the future as well as help small and medium-sized enterprises (SMEs), startups and incubators create new economic opportunities in these regions. It will also support investments in the clean energy transition, such as in energy efficiency.
A dedicated just transition scheme under InvestEU will also mobilize up to €45 billion in investments, seeking to attract private investments, including in sustainable energy and transport that benefit those regions and help their economies find new sources of growth.
Finally, a public sector loan facility will be established with the EIB and backed by the EU budget in order to mobilize €25-30 billion of investments. This facility will provide loans to the public sector, for instance for investments in district heating networks and the renovation of buildings.
Money for Estonia's oil shale sector
The Commission is very much counting on financial leverage. Businesses and investors will be offered loans and guarantees under favorable conditions, and state aid rules will be reviewed to ensure that member states can contribute more boldly to going greener.
The Commission will also pay special attention to poorer regions, where the transition may prove particularly challenging. Speaking about the €100 billion Just Transition Mechanism, Executive Vice-President for the European Green Deal Frans Timmermans touched on oil shale in the Baltics as well, reported ETV news broadcast "Aktuaalne kaamera."
"We want to send a message to coal miners in Austria, Western Macedonia and Silesia, peat miners in Ireland, the oil shale-dependent Baltic states and many others as well," Timmermans said. "We know that you will be faced with a steeper path toward achieving climate neutrality. The at least €100 billion Just Transition Mechanism is a promise that the European Union will support you in this transition."
European Commission spokesperson Vivian Loonela said that this is new money that the Commission is bringing to the table and for which it wants to see how Estonia's oil shale sector can be aided.
"How it can help the economy, train people, and how it can better help the entire region economically," Loonela said.
In order for the Commission's Green Deal to succeed, it must have the support of EU member states' governments. Talks are only just starting to gain momentum regarding the EU's multiannual financial framework (MFF), and Poland, for example, has yet to support achieving climate neutrality.
Editor: Aili Vahtla