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EU steps in with fund to ease the cost of going green

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EU steps in with fund to ease the cost of going green
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The European Union has unveiled details of its 1-trillion euro Green New Deal designed to cut emissions and move to a more climate friendly economy.

European Commission chief Ursula Von der Leyen has made the fight against climate change a priority and all EU countries except Poland have agreed they should transform their economies over the next 30 years.

Poland, which produces around 80 per cent of its power from coal, says it needs more guarantees on funding before agreeing to Europe’s new 2050 objective.

The plan includes the Just Transition Fund - a mechanism designed to help coal-dependent countries move away from fossil fuels.

In total, the Commission aims to mobilise around €100 billion under the new instrument, which will comprise a fund of around €30 billion.

The fund will be managed under Cohesion Policy rules and will draw resources from the EU’s long-term budget, which is still under negotiation, including the European Regional Development Fund and the European Social Fund Plus.

According to the European Commission's 2018 report on coal regions, coal currently provides 16 per cent of EU energy consumption and about 24 per cent of the power generation mix.

It is estimated that by 2030, around 160,000 direct jobs in the coal sector may be lost. Two thirds of the coal power plants currently operating in Europe are expected to close between 2020 and 2030.

Euronews’ Business Editor Sasha Vakulina sat down with the EU Commissioner for Cohesion and Reforms, Elisa Ferreira, to find out more about how the fund will work.

Sasha Vakulina, Euronews Business Editor: Could you tell me how important is this instrument within the bigger picture of the European Green Deal and, of course, within all the European Union efforts towards carbon neutrality?

Elisa Ferreira, EU Commissioner for Cohesion and Reforms: Well, I think it is a crucial instrument because the Green Deal will have a very strong impact in certain regions, that is for sure. Those regions that depend completely, or almost completely, on coal, or very carbon-intensive industries. And so we needed an instrument that would help these regions to make the transition without major social economic costs. So the Just Transition Fund and Just Transition Mechanism will not be the financial instrument to do the Green Deal, they will just tackle part of it.

Sasha Vakulina: So this is what’s new about the Just Transition Fund? It will be focused exactly on the carbon dependent regions?

Elisa Ferreira: Yes, carbon dependent regions and regions that are dependent on industries that emit a lot of carbon and other gases (emissions) that we have got to cut. So, the basis is regional, so it is directed to address very, very strong shocks in very specific regions.

Sasha Vakulina: Let’s go into specific regions. We have on the one hand Poland - the country very dependent on the (coal) industry and at the same time we have Germany - the country very dependent on the coal industry as well. But of course these two are on different pages when it comes to the overall picture of their economic development.

Elisa Ferreira: You're absolutely right. Our decision was not to exclude completely any country. Not all countries receive the same amount of support, because there is an element that is present in regional policy and this element is ‘relative prosperity’. What do I mean by this? A country that is rich, that has a very sustainable and robust development, level of development, is more capable of doing by itself this transition than a country that is extremely weak and that has to face a lot of development problems at the same time. This is what we call the ‘relative prosperity' element and this is taken into account when you calculate how much is going to be available for this purpose in the different member states. So no country is excluded, but of course a country that is poorer will have proportionally more money to introduce this transition.

Sasha Vakulina: Would that work in parallel, given the Cohesion support and cohesion funds and Just Transition Fund?

Elisa Ferreira: The Just Transition Fund comes on top in financial terms. It is a new instrument for new problems. Nevertheless, it anchors on the social envelope, social-cohesion envelope or European social fund envelope that the country has got. Then how can they trigger it? They will have to look at regions to see “okay, what do you want to do here”. Of course, the selection of the regions comes from the dialogue between the member-state and the Commission, so the member state is the one that selects the region. And once the region is selected the member state - with the local actors - has got to make a plan and explain what are the components of this transition plan. With this transition plan then you have a set of financial instruments that will help a member state to make this transition and this is the ‘seed’ money, so to speak, it is this fresh money that comes from the Just Transition Fund.

Sasha Vakulina: Whilst we do have thousands and hundreds of thousands of jobs in the coal industry that will be helped and will get those funds, people will be getting some help and support in order to carry on with their job when some jobs disappear. So while some citizens will be supported, others might be concerned. What is the impact for them when it comes to the fresh money?

Elisa Ferreira: The fresh money comes to address this specific issue.

Sasha Vakulina: Would that have impact on the expenses of other EU citizens?

Elisa Ferreira: No member state can allocate all of its regional fund or all of its social fund to these specific problems. No, there is a limit and this limit is 20 per cent.

Sasha Vakulina: Why is the limit needed?

Elisa Ferreira: Because otherwise you would just forget about all the other needs in the country to address these kind of problems. So to avoid this over-concentration on the transition - these regions have a problem, but other regions have other problems, there are regions that are very far away from everything, there are regions that are very poor. So there are all these other objectives that a country has got to address. For this specific purpose you cannot put more than 20 percent of each of the funds.

Sasha Vakulina: And that’s exactly what I want to ask you next. What are the other priorities and other challenges that you see for the Cohesion strategy apart from the environmental issues?

Elisa Ferreira: Well, the Cohesion strategy has got its own objectives set a long time ago. So you have regions that are peripheral regions, outermost regions, that suffer from outflow of people, that are becoming very old, you have urban problems, there are areas inside the cities, even big cities, that are areas of exclusion. So you have all sets of problems that you also have to address. So you cannot only look at this. Nevertheless if we take this issue, the Green Deal seriously - and we take it very, very seriously, we’ve got to do it in Europe - then you necessarily have ‘to green’ the whole budget. So the usual Cohesion policy according to the level of the regions, level of development of regions, has got to bear in mind the modern aspect of Cohesion. So there are no old policies and new policies. Cohesion policy IS going to be greener, it is going to be more digital, it is going to be more inclusive if possible. It will have to be modernised and it is being modernised.

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