- The European Investment Bank (EIB), the European Commission and the Silesian Region have held a conference on loan and grant instruments that can be used under the Just Transition Mechanism.
- This financing can aid public and private investment in regions hardest hit by Europe's ongoing transition to a climate-neutral economy.
The Just Transition Mechanism is one of the key elements of the European Green Deal — the European Union’s plan to achieve climate neutrality in Europe by 2050. The mechanism consists of non-repayable funds (grants) from the first pillar, the Just Transition Fund, as well as repayable and combined instruments from the second pillar, the Just Transition scheme under InvestEU, and funds from the third pillar — the Public Sector Loan Facility. The instruments are supported by a wide range of advisory support.
Under the Just Transition Mechanism, the European Commission provides support to Member States that have identified territories which are already affected or will soon be hardest hit by the transition to climate neutrality. The Just Transition Fund is the first pillar of the mechanism. It supports the economic diversification and reconversion of areas undergoing transition through, among others: the up- and re-skilling of workers, investment in small and medium-sized enterprises (SMEs), the creation of new businesses, research and innovation, improving the environment, investment in clean energy, job-search assistance, and the transformation of existing carbon-intensive installations.
The second pillar of the mechanism is the Just Transition scheme under the InvestEU programme. The goal of the programme, thanks to EC guarantees, is to mobilise both private and public investment, characterised by higher levels of risk, in just transition regions. The InvestEU programme focuses on four areas that reflect key EU policy priorities: (a) sustainable infrastructure; (b) research and development, innovation and digitalisation; (c) SMEs and (d) social investment and skills.
Thanks to an agreement between the European Commission and the EIB, regions most affected by Europe’s transition to a climate-neutral economy will be able to take advantage of the grants and loans available under the Public Sector Loan Facility, the third pillar of the Just Transition Mechanism. This facility aims to support the transition away from fossil fuels in a way that is fair and beneficial to all — including communities whose livelihoods have previously relied primarily on mining or on other industries with a negative impact on the environment.
The Public Sector Loan Facility allows public entities that plan to implement investment projects in affected regions to benefit simultaneously from EIB loans and EU grants, thereby reducing the financial burden on state budgets. The projects that are eligible for funding are those located in or benefiting territories which, in accordance with the Just Transition territorial plans presented by Member States and approved by the Commission, face the greatest challenges in terms of moving away from fossil fuels and carbon-intensive industries. In Poland, the following districts can expect to receive support under the Just Transition Mechanism: Konin, Wałbrzych, Piotrków, Sieradz, Rybnik, Bytom, Gliwice, Sosnowiec, Tychy, Katowice, Bielsko and Oświęcim.
The EIB will make available up to €10 billion in funding by 2027 to spur investment to reduce the socioeconomic costs of the transition, thereby facilitating the creation of new businesses, jobs and infrastructure.
EIB Vice-President Teresa Czerwińska explained, ”Moving away from fossil fuels is essential to curb global warming and should be a priority regardless of the difficult macroeconomic conditions and the war in Ukraine and its aftermath. Funds from the Just Transition Mechanism are meant to streamline this process and to bring financial relief to those EU regions where these funds are needed the most. Several regions in Poland are eligible, and we hope that this funding will support the transition and local development.”
During her speech, Commissioner Elisa Ferreira of the European Commission stressed that “Poland is one of the most carbon-intensive countries in Europe. This puts Poland at the forefront of the ongoing energy and climate revolution. It is also the reason why Poland receives the highest share of support among EU countries under the Just Transition Mechanism. Several regions of Poland — including Silesia, where we are meeting today — are particularly vulnerable.”
“Issues related to the disbursement of funds from the Just Transition Fund are no longer a matter of discussion, but of implementation. We have held meetings with representatives of the trade unions and have had another meeting with the Vice-President of the European Commission, Frans Timmermans. Step by step, we are indicating the areas where money from the JTF will be invested — and let me remind you that the sum involved is €2.2 billion. In a sense, our transition must be ‘smart’: We must be able to create new branches and areas within industry whose common denominator will be environmentally friendly technologies. It is highly likely that the mining sector will be gradually closed down over the coming years. The trade unions have signed a social agreement in which they have consented to this scenario. With this in mind, therefore, we need to create completely new industries. An important challenge is the revitalisation of post-industrial and former mining areas, which must be given a new lease on life. New jobs will be created there in the future. The Silesian Region, in cooperation with the Central Mining Institute, has completed the important task of carrying out an inventory of these areas, which has been under way since 2019. The region has approximately 330 former mining areas, and 270 post-industrial sites. Their ownership status varies. As a local government official, I would certainly prefer it if these areas were handed over to local governments, but it is nevertheless a very clear map for investors. What the future holds for these areas, only time will tell,” said Marshal of the Silesian Region Jakub Chełstowski.
“Now, even more than five years ago — when we proposed in the European Parliament the establishment of the Just Transition Fund — it is clear why such instruments are so needed in the European Union. Today, they are no longer just tools to fight smog or, more broadly, to protect the climate and the environment and to ensure that everyone receives adequate assistance during these essential transformations. Today, with Russia’s criminal attack on Ukraine and — finally! — our disconnection from Russian energy supplies, thanks to which Putin built his empire, the Just Transition Mechanism not only translates into economic and energy security, but also preserves our very existence. That is why it is also so important that the EIB is not only a climate bank, but above all an energy transformation bank, and that the funds it provides are used properly and efficiently in the EU regions in greatest need, such as Poland’s Silesian Region,” said Jerzy Buzek, Member of the European Parliament.
Just Transition Mechanism
The abandonment of coal mining and industrial production and energy generation using methods that generate large amounts of CO2 entails a number of changes, namely:
- energy transformation, the aim of which is to find new sources of heat and electricity generation;
- ecological transformation, which involves, for instance, the cleaning up former mining areas;
- socioeconomic transformation, which is aimed at attracting new businesses and thus compensating for job losses and declining tax revenues;
- infrastructure transformation, which is a prerequisite for attracting new industries to the regions concerned.
The Just Transition Mechanism, which is a key element of the European Green Deal, addresses the social and economic costs associated with the transition to a climate-neutral economy. The mechanism supports projects located in Just Transition Mechanism regions identified by Member States and the Commission in Just Transition territorial plans or in areas where the implementation of projects will benefit JST regions.
The mechanism consists of three financial pillars: (a) the Just Transition Fund, (b) the Just Transition scheme under InvestEU, and (c) the Public Sector Loan Facility. The EIB supports all three pillars as described in the study entitled “Supporting the Just Transition Mechanism – comprehensive proposal of the EIB Group”. The InvestEU Advisory HUB, JASPERS, Target, and the Just Transition Platform also provide extensive advisory support.
The EIB is active in around 160 countries and is the world’s largest multilateral lender for climate action projects. In its Climate Bank Roadmap 2025, the EIB Group has set four core work streams, which include “ensuring a just transition for all”. The EIB's ambition is to unlock €1 trillion worth of investment for climate action and environmental sustainability by 2030 and to align all new financing activities with the principles and goals of the Paris Agreement.