A political agreement by the European Parliament and the Council was reached on April 26 on the Commission’s proposal for a new Public Sector Loan Facility (PSLF) to support the green transition in Europe to achieve the Union’s 2030 climate targets and a EU climate neutrality by 2050 at the latest.
With this, all the proposals of the Just Transition Mechanism (JTM) have been agreed, and are pending the final approval by the European Parliament and the Council.
The 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). 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.
“This Facility is an important tool to help our regions and communities meet the challenges stemming from climate transition,” EU Cohesion and Reforms Commissioner Elisa Ferreira said, adding that it will complete the EU tool kit for supporting those living in just transition regions to develop new skills and create new businesses and jobs. “It is very important that we could do so today, only a few days after the agreement on a climate law. By easing the costs of the transition, we will help the EU as a whole to meet the 2050 climate neutrality goals. I look forward to the Regulation’s final adoption so that additional funding can start flowing for a cohesive transition and a fresh start for the affected regions and people,” she added.
In delivering the European Green Deal, the Facility will help to address the socio-economic challenges of the transition to climate neutrality in the most affected territories as identified in the territorial Just Transition Plans. It will complement the two other pillars of the Just Transition Mechanism, namely the Just Transition Fund (JTF) and a dedicated just transition scheme under InvestEU.
Bavarian MEP Henrike Hahn (The Greens/EFA), Rapporteur on the Public Sector Loan Facility under the Just Transition Mechanism in the European Parliamentary Committee on Economic and Monetary Affairs, noted that the Public Sector Loan Facility will support the green transition in Europe to achieve the Union’s 2030 climate targets and a EU climate neutrality by 2050 at the latest.
With this facility, we support affected 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. 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%,” Hahn said. “It is a success, that it was agreed on ensuring compliance of the Facility with the Do No Significant Harm Principle, gender quality and EU fundamental rights and give mandate to the Commission to assess the possible introduction of a gender impact assessment in the future. We also managed to include gender disaggregated data in the key performance indicators,” the MEP added.
“We send a strong signal for the Green Deal fully excluding the fossil fuels and nuclear from the support of the Public Sector Loan Facility as for the JTF. Taxonomy is included as a tracking tool in the interim Commission evaluation and we have strong criteria for the selection of other finance partners than the EIB to ensure that the lending policy is consistent with EU environmental and social standards, good tax governance requirements and transparency of projects financed,” Hahn said.
Overall, the Facility is expected to mobilise between €25 and €30 billion of public investments over the next 7 years. The EIB will be the main finance partner. However, the Regulation provides for the possibility to cooperate with other finance partners, in case of a possible future increase of resources.
The Facility will be implemented under direct management, by the Commission and the European Climate, Infrastructure and Environment Executive Agency (CINEA), and will either provide support to individual projects or through framework loans.
