Just Transition Fund (JTF)

The Just Transition Fund is a financial instrument created in 2021 by the European Union to provide support to all Member States, under the cohesion policy, to mitigate the economic and social consequences of the energy, environmental and climate transition. It aims to support the diversification and transition of territories, industries and workers most dependent on fossil fuels and therefore the most fragile. The sectors targeted are those which are doomed to disappear, threatening numerous jobs: production of coal, lignite, peat and oil shale, coal-fired power stations, production of cement, paper and fertilizers… The JTF will also facilitate the implementation of the Green Deal for Europe.

The JTF has a budget of €19.2 billion for the period 2021-2027, to which Member States can transfer additional resources from their national allocations under the European Regional Development Fund (ERDF) and the European Social Fund Plus (ESF+). The JTF specifically aims to help the people and places suffering most from the transition to climate neutrality: it is therefore more targeted, both geographically and thematically, than other cohesion policy funds. Thus, Poland is the main beneficiary of the JTF with 3.8 billion euros (20% of the total), followed by Germany with 2.5 billion euros and Romania with 2.1 billion.

The JTF follows shared management rules, which imply close cooperation between national, regional and local authorities. Thus, Member States prepare their Territorial just transition plans (TJTP) which identify the eligible territories, the challenges of the transition, the activities concerned, the financing needs and the development objectives to be achieved by 2030, which are then submitted for approval to the European Commission. After approval, it is the Member States and eligible regions which are responsible for decisions on the allocation of the JTF among all projects applying for funding. JTF financing is therefore qualified as State aid, which must be compatible with the relevant European regulations. Financial data and the map of territories eligible for the JTF are accessible here.

The projects eligible for the JTF can be varied as long as they facilitate the energy, environmental and climate transition, as well as the economic diversification of eligible territories: aid to SMEs and the creation of new businesses, training and requalification of workers, energy efficiency of buildings, clean mobility, renovation and modernization of district heating networks, digital, circular economy, decarbonization, production of renewable energies, etc.

The process of obtaining JTF funding starts with the submission of an application file at the regional level, following the publication of dedicated calls for projects where the competent authority publishes the eligibility and evaluation criteria. Then, public authorities carry out a thorough evaluation of the proposals and select the most competitive projects. Selected proposals that receive large amounts of State aid are forwarded to the European Commission for a detailed assessment according to the criteria set out in the applicable State aid regulations (State aid notification, typically beyond €30 million per company per project). The Commission, after examination, decides whether the aid measure is approved. If it obtains authorization from the Commission, the project promoter finalizes a financing agreement with the public authorities. Once the agreement is in place, the project enters its execution phase. The beneficiary of JTF funding is then required to periodically inform the public authorities and the European Commission of its progress and of any developments impacting the initial plan.

Selection criteria may vary from region to region. Generally speaking, the project must be consistent with the objectives of the FTJ, particularly in terms of climate transition and social impact. For example, it must lead to a significant reduction in greenhouse gas emissions and have a tangible impact on employment in the region. It must have a solid financial plan, be technically, operationally and financially mature and have a positive impact on the surrounding region.

european economics mobilises its unique expertise in State aid for its clients who wish to apply for the FTJ. We support them to carry out project engineering in order to maximize the request for funding and minimise the risk of failure, to prepare application files, and throughout the notification procedure to the European Commission to obtain its validation – an area in which European Economics has a 100% success rate.