Public sector loan facility to support just climate transition – provisional agreement reached

The Council presidency and the European Parliament's negotiators today reached a provisional agreement on a new public sector loan facility that will support the transition towards a climate-neutral economy in the EU in an inclusive manner.

The facility will benefit the regions most affected by the transition towards the EU's 2030 climate targets and the objective of EU climate neutrality by 2050, such as coal- and carbon-intensive regions. It will support a wide range of sustainable investment projects that address the development needs of these regions resulting from the climate transition. This includes projects in areas such as energy and transport infrastructure, district heating networks, energy efficiency measures and social infrastructure.

The Just Transition Mechanism will help vulnerable communities make the leap to clean energy

The facility will provide €1.5 billion in grants from the EU budget combined with up to €10 billion in loans provided by the European Investment Bank (EIB). Together, these are expected to mobilise up to €25–30 billion in investments for the benefit of the regions concerned. The facility may also be extended to finance partners other than the EIB under certain conditions.

To ensure the mobilisation of additional investments, only those projects that do not generate a sufficient stream of own revenues will be eligible.

The main additional elements agreed by the Council presidency and the European Parliament's negotiators include the following:

To ensure that all member states are able to benefit from the grant component, national envelopes will be earmarked until the end of 2025. After that date, the remaining resources available for the grant component will be provided on a competitive basis at EU level.
In the event that there are not enough resources to support eligible projects, award criteria should give priority to projects located in less developed regions, projects contributing directly to the EU’s climate targets and projects promoted by public entities having endorsed decarbonisation plans.
The envelope for advisory support for the preparation, development and implementation of eligible projects has been increased to €35 million. At least €10 million of these resources will support the administrative capacity of beneficiaries, notably in the less developed regions, through the advisory hub set up under InvestEU.
For less developed regions, the maximum amount of the grant provided under the facility will be increased to 25% of the amount of the loan.
The facility will not support activities excluded from the scope of support under the Just Transition Fund. This includes investments related to nuclear power stations, tobacco products and fossil fuels.
Throughout the preparation, implementation and evaluation of eligible projects, a set of horizontal principles will need to be respected. This includes respect for fundamental rights, in particular gender equality and non-discrimination. The objectives of the facility will also be pursued in line with the UN Sustainable Development Goals, the European Pillar of Social Rights, the polluter pays principle, the Paris climate agreement and the ‘do no significant harm’ principle.