Financing of Europe’s transition to the Green Economy
To finance the transition to the green economy, the European Commission has formulated the European Green Deal Investment Plan providing for the Just Transition mechanism. The targeted support provided in 2021-2027 through this mechanism will help mobilise at least EUR 100 billion in the most affected regions so that the social and economic impact of the Green Deal is mitigated. The mechanism will ensure the necessary investment required to help employees and communities that are currently dependent on the value chain of fossil fuel. It will be complementary to the considerable contribution from the EU budget that will be made through all the relevant facilities. The mechanism consists of three financing sources: the Just Transition Fund, special-purpose InestEU programme, and the loan facility offered to the public sector by the European Investment Bank.
Just Transition Fund
EUR 7.5 billion of the new EU funds will be allotted for the Just Transition Fund. Those Member States that will wish to use their share of the funds will have to specify, in cooperation with the Commission, eligible areas in the special territorial plans of the Just Transition. Initially, Lithuania has been allotted EUR 97 million. First of all grants to regions will be made out of these funds. For example, support will be provided to employees seeking to attain skills and capabilities required for the future labour market; to SMEs, start-ups and business incubators intending to open new economic opportunities in these regions. Investments in the transition to clean energy, e. g. in energy efficiency will also be supported.
The objective of the special system of Just Transition under the InvestEU programme is to pool investments of up to EUR 45 billion. The application of the system is aimed at attracting private investments that will be beneficial for the regions most affected by the transition, including investments in sustainable energy and transport systems, so that the regions are enabled to find new opportunities for economic growth.
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Modernisation Fund
The Modernisation Fund was established as part of implementation of the EU Directive establishing a scheme for greenhouse gas emission allowance trading within the Community. The Fund is intended for the upgrading of energy systems and the transition to a more efficient use of energy in 10 Member States including Lithuania. The Fund is financed from the receipts of auction sale of greenhouse gas emission allowances (2% of the total EU allowances for relevant period is allotted to the Fund).
Investments supported by the Fund must be in line with the objectives of the Directive, the targets of the EU’s 2030 Climate and Energy Framework, and the long-term objectives stated in the Paris Agreement. The first calls for proposals are planned for the beginning of 2021. The European Commission, the Member States, the Investment Committee and the European Investment Bank will take part in the project selection process. The Member States will select project proposals and submit them to the European Investment Bank for evaluation. The total amount of the Fund is approx. EUR 7.8 billion (depending on market prices for the allowances). Lithuania share is 2.57%, i. e. approx. EUR 200 million.
For more information (in English) go to
https://ec.europa.eu/clima/clima/policies/budget/modernisation-fund_en.
Innovation Fund
In 2020, the European Commission intends to set up the Innovation Fund for the promotion of employment of low-carbon technologies. The amount of the fund will be at least EUR 10 billion (depending on market prices for the allowances). The purpose of the Innovation Fund is to support applied technologies as research will be financed by Horizon Europe and partnership programmes and infrastructure development will be financed by Connecting Europe Facility, Modernisation Fund and Cohesion Fund. Undertakings will be able to submit project proposals, with an opportunity for getting 40% to 60% of the expenses covered. Project selection criteria will include GHG emissions reduction, degree of innovation, project maturity, scalability, and cost efficiency (GHG reduction per euro).
For more information (in English) go to https://ec.europa.eu/clima/policies/innovation-fund_en.
Last updated: 28-11-2023