The European Parliament adopted on June 23 three EU funds to strengthen the EU’s economic, social and territorial cohesion with a total of €243 billion, focusing on climate action, social programmes and sustainable urban development.
The so-called “cohesion package” comprises the European Territorial Cooperation Goal (Interreg), the European Regional Development Fund and Cohesion Fund, as well as the Common Provisions Regulation, a set of norms governing EU regional, cohesion and social funds over the next seven years.
In line with the new common provision rules, both Interreg and the Regional and Cohesion Funds will have to direct at least 30% of their resources to climate action, the circular economy and investments in sustainable growth and job creation. They also foresee specific measures for SMEs and outermost regions.
Investments related to nuclear power or fossil fuels are excluded from support, with an exception made for projects on natural gas to replace coal, valid until December 31, 2025.
German MEP Henrike Hahn, rapporteur on the Public Sector Loan Facility under the Just Transition Mechanism in the European Parliamentary Committee on Economic and Monetary Affairs, said after the vote the public sector loan facility is the third pillar of the Just Transition Mechanism, along with the Just Transition Fund and just transition scheme under InvestEU.
The Public Sector Loan Facility specifically targets public entities, creating preferential lending conditions for projects that do not generate sufficient revenue to be financially viable. It consists of a combination of grants (€1.5 billion) from the EU budget and loans (€10 billion) provided by the European Investment Bank (EIB), Hahn said. The grant support will be added to the EIB loan and reduce the financial burden for beneficiaries and increase the attractiveness of the investments concerned. Advisory support will be provided to beneficiaries through the advisory hub set up under InvestEU.
“Union support under the facility will be available to all Member States, initially based on earmarked national shares, and will be awarded through calls for proposals. Support may only be provided to projects that do not generate sufficient revenue streams to be financed by loans granted under market conditions. In addition, to be eligible for support, projects must contribute to addressing the challenges raised by the transition to a climate neutral economy and benefit territories identified in a territorial just transition plan. They must also receive a loan from the finance partner under the facility, the European Investment Bank,” Hahn said.
“Examples of projects or investments that contribute to the development needs in the transition to a climate-neutral economy include energy and transport infrastructure, district heating networks, green mobility, smart waste management, clean energy and energy efficiency measures including renovations and conversions of buildings, support to transition to a circular economy, land restoration and decontamination, as well as up-and re-skilling, training and social infrastructure, including social housing,” the German MEP said.
“We ensured priority support to less developed regions and local municipalities to implement high standard projects for new jobs and new businesses. Priority will be given to projects located in less developed regions, to projects contributing to climate objectives and those being promoted by public entities that have adopted a decarbonisation plan,” Hahn said, adding, “In the facility, we pay special attention to most vulnerable regions, with clear prioritisation criteria for projects and a co-financing rate for less developed regions with 25%. We have also ensured that Taxonomy will be included as a tracking tool in the interim Commission evaluation”.
