The EU regions identified as most at risk or overburdened by the transition, and thus most in need of justice-oriented policies, are those whose economies rely heavily on fossil fuel extraction and production, particularly coal. Poland, Germany, Romania, Bulgaria, the Czech Republic and Spain face the greatest potential job losses in this sector.

The policy establishes three financial mechanisms to work towards a Europe-wide just transition: the Just Transition Fund (JTF), a dedicated transition scheme under InvestEU, and a loan facility provided by the European Investment Bank. Respectively, they offer grants, mobilise private investments and leverage public finance. Whereas the eligibility criteria for the JTF promote the diversification and modernisation of economies and the reskilling of workers, the other mechanisms are broader in scope and include a wide range of sectors.

As a nascent sector set to grow in scale and importance in the coming decades, carbon dioxide removal falls under the scope of the Just Transition Mechanism. To function, the EU CDR industry will need a large workforce, making it a natural candidate for reskilling programmes across multiple sectors, including academic research, engineering and technical jobs.

To access allocated funds, member states must prepare territorial just transition plans covering territories “most negatively affected based on the economic and social impacts resulting from the transition”. Special consideration should be given to islands and outermost regions.

The InvestEU “Just Transition” scheme

The second pillar of the JTM provides budgetary guarantees to ‘implementing partners’ that the EU Commission will provide direct or indirect financing. It can support investments detailed in national territorial just transition plans spanning a wide range of projects, including energy and transport infrastructure decarbonisation, economic diversification and social infrastructure. This scheme is expected to mobilise EUR 10-15 billion, coming mostly from the private sector, with some support from InvestEU implementing partners such as the European Investment Bank.

The public sector loan facility with the European Investment Bank

The third pillar of the JTM and its accompanying regulation provides a mix of EUR 1.5 billion in grants from the EU budget and approximately EUR 10 billion of loans from the European Investment Bank. A further EUR 18-25 billion of public investments is expected to be mobilised. The loan facility mainly targets energy and transport infrastructure, district heating networks, energy efficiency measures and social infrastructure. Applications must be linked to the relevant territorial just transition plan to demonstrate how the project supports specific national ‘green transitions’. Each member state is reserved a part of the budget under the facility until 2025, after which any unused amount will be made available to projects across the entire EU.

While the two other pillars of the JTM provide rather broad requirements, the Just Transition Fund outlines a specific list of actions and sectors that can be supported. CDR in its broadest sense could directly or indirectly fall under multiple categories. For example, it could help funnel productive investments in SMEs and investments in the creation of new firms. On the research side, CDR can be a destination for investments in research and innovation activities. On the social side, it could accompany the upskilling and reskilling of workers and job seekers. Finally, on the infrastructure side, it could be applied to upgrade district heating networks, especially combined heat and power plants, to unlock investments in the deployment of climate technology and systems, and for investments in renewable energy.

Evaluating the Just Transition Mechanism

Being the EU’s flagship mechanism to ensure no one is left behind in the green transition, the JTM’s main lever consists of requiring the development of territorial just transition plans. These are intended to ensure a high level of ambition whilst allowing civil society and the affected publics to have visibility over the just transition plan. There is also a certain degree of technical assistance provided for local public authorities, mostly through the Just Transition Platform, a one-stop shop platform providing information on all aspects of the JTM.

However, the JTM has several potential drawbacks. Firstly, the JTM might inadvertently reward countries that have delayed climate action by providing funds to member states with carbon-intensive industries that would not have decarbonisation plans otherwise. Secondly, the initial budget of the JTF was set at about EUR 44 billion, whereas it has now been downsized to EUR 17.5 billion, which will inevitably mean that fewer projects will be supported. Thirdly, the vision of fairness set out in the JTM and the European Green Deal in general has been criticised as a short-term, dirigiste solution to systemic challenges. Only specific sectors and regions are included, whereas other meaningful activities involving other types of actors and regions are left out of the JTM. Finally, the JTM’s operationalisation of climate justice is focused on those who are adversely affected by the transition, rather than on those who are adversely affected by climate change at large.