The Fair Transition Fund will help Member States mitigate the social and economic consequences of the transition on climate neutrality. The package includes 7.5 billion euros from the multiannual budget for the period 2021-2027 and an additional 10 billion from the EU's Recovery Instrument.

 
· Emphasis on the least developed and outermost regions and islands

· The condition for financial support is a commitment to climate neutrality by 2050

· Investments related to waste incineration and fossil fuels are excluded

· A "green reward mechanism" for Member States that reduce emissions faster

The Fair Transition Fund will help Member States mitigate the social and economic consequences of the transition on climate neutrality.

 The package includes 7.5 billion euros from the multiannual budget for the period 2021-2027 and an additional 10 billion from the EU's Recovery Instrument. It will finance projects aimed at economic diversification, economic reorientation or job creation, as well as projects that contribute to the transition to a sustainable, climate-neutral and circular economy.

 The Fair Transition Fund will finance job search assistance, training and retraining, and the active involvement of workers and jobseekers during the transition of the European economy to climate neutrality. It will also support micro-enterprises, business incubators, universities and public research institutions, as well as investments in new energy technologies, energy efficiency and sustainable local mobility.

 The Fund will not finance waste incineration projects, as well as the construction or decommissioning of nuclear power plants, activities related to tobacco products and investments involving fossil fuels.

 In their plans for a fair transition, Member States must identify the areas most affected by the energy transition and direct the funds received to them. Special attention should be paid to the specifics of islands, island areas and the outermost regions.

 If the funds for the Fund are increased after 31 December 2024, a "Green Reward Mechanism" will be introduced at the initiative of Parliament. These additional funds will be distributed to the Member States, with those who reduce industrial greenhouse gas emissions faster receiving more funds.

 Other key aspects

· In order to have access to the Fund, Member States will have to commit at national level to achieving climate neutrality by 2050. Before adopting this target, they will be entitled to only 50% of the allocated funds.

· Firms in financial difficulties may receive support in accordance with the Union's provisional State aid rules established for exceptional circumstances.

· Funds can be transferred from other cohesion funds on a voluntary basis.

· The share of co-financing of investments with Union funds is limited to a maximum of 85% for less developed regions, 70% for transition regions and 50% for more developed regions.

 Next steps

 Once the Council has formally accepted the agreement, the regulation will enter into force on the twentieth day following that of its publication in the Official Journal of the EU.

Additional information

The Fair Transition Fund is the first pillar of the Fair Transition Mechanism, a key tool to support regions, industries and workers who will face the greatest challenges in implementing the European Green Plan. On December 9, 2020, lawmakers reached an interim political agreement on the Fund.

Links

The adopted text will be available here (18.5.2021.)

https://www.europarl.europa.eu/plenary/hr/texts-adopted.html   

EP study: Summary of the Fund for a Fair Transition

https://www.europarl.europa.eu/RegData/etudes/ATAG/2021/690602/EPRS_ATA(2021)690602_EN.pdf