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On July 16, 2019 Commission President von der Leyen announced in her political guidelines the creation of a “Just Transition Fund”. This fund has since become an important element of the negotiations on the European Union’s budget and climate policy.

This briefing sets out four benchmarks for designing the governance structure of the fund to make sure the EU moves faster towards climate neutrality.

First, the fund should prioritise coal and carbon intensive regions, as well as address the transition needs of the rest of the economy. The phase out of coal by 2030 remains a priority and challenge in a significant number of mostly Central and Eastern European countries, but transformational change is needed across the entire economy and in all EU countries to achieve climate neutrality by 2050 latest.

Secondly, the fund should require Member States to propose a Paris-compatible phase out plan including an end-date for coal or another high-emissions technology to be eligible. It is central to the fund’s success that it accelerates the transition for example through the phase out of fossil fuels and the phase in of renewable energy. Not all EU Member States have adopted coal phase out plans yet, creating a risk of Just Transition processes getting stuck.

Thirdly, the Just Transition Fund should add value to coal and carbon intensive regions and sectors by financing the development of Just Transition strategies. The fund will not be able to finance the EU’s entire energy transition, but funding development of transition strategies can help Member States mobilise financing from relevant sources in the EU budget, such as the Emission Trading System’s Modernisation Fund and the private sector. For other sectors and regions, the fund can add value by closing knowledge gaps on the social impacts of decarbonisation and facilitate initial dialogue.

Fourthly, the fund will only support the EU’s transition if it works towards a clear goal, such as achieving climate neutrality by 2050. Agreement at the December Council on the Commission’s proposal to achieve climate neutrality by 2050 at the latest will be an important first step. Once this agreement is made, it will need to be followed by a proposal for a new EU Climate law that will translate political commitment into legally binding targets and measures which will help Member States to plan their Just Transition strategies.

Read the full briefing, The Just Transition Fund: 4 Benchmarks for Success, here.