The EU is committed to becoming the first climate-neutral bloc in the world by 2050.
To finance the green transition, the European Commission announced in January an ambitious investment plan and a just transition mechanism to ensure that the transition happens in a fair way and that no-one is left behind.
A challenge will be the closing down of coal fueled power plants without replacing them with natural gas in the short term. The previous Commission, just before the end of its mandate last October, adopted a list of so-called projects of common interest on cross-border energy infrastructure in the EU.
The number of gas infrastructure projects decreased compared to a previous list two years ago but there are still 32 gas projects, or 21% of all projects, on the new list. Natural gas emits much less carbon dioxide than coal but is still a fossil fuel.
Despite criticism for inconsistency with the long-term goal of decarbonisation and a fossil fuel free future, the parliament voted in favour of the list. Apparently, it had either to approve the whole list or reject all projects in the list.
The just transition mechanism will provide targeted support to help mobilise at least €100 billion in the most affected regions to alleviate the socio-economic impact of the transition and create the necessary investment to help workers and communities which rely on the fossil fuel value chain.
The mechanism will consist of three financing pillars. The first pillar is the transition fund which will receive €7.5 billion of fresh EU money during the next multi-annual framework (2021 – 2017). The funding is expected to trigger more funding, in total between €30 and €50 billion, by matching funding from the European Structural Funds and national co-financing from the member states.
The fund will be complemented by a transition scheme under InvestEU and a public sector loan facility that together are expected to leverage up to €75 billion of investments.
The Commission explains that the just transition fund will focus on the social and economic costs of the transition in the most impacted regions. These are regions where many people work in coal, lignite, oil shale and peat production or that host greenhouse gas-intensive industries. The member states will have to prepare just territorial plans for those regions.
The fund will for example support workers to develop skills and competences for the job market of the future but also new economic opportunities to create jobs in these regions. It will also support investments in clean energy transition, for example in energy efficiency.
The other two financing pillars will finance a wider scope of investments in energy and transport infrastructure, including gas infrastructure, district heating, decarbonisation projects, economic diversification and social infrastructure. This funding is also available for other regions.
There is consensus that the transition towards climate neutrality should be “just” but the concept seems far from clear. At a recent seminar in Brussels (19 February), the World Wide Fund for Nature (WWF) gathered EU policy makers and stakeholders to discuss what a just transition really is and how it can be ensured for the affected regions.
WWF issued also a report where it has analysed four coal regions: the Ruhr region in Germany, Western Macedonia in Greece, Upper Silesia in Poland, and the South West region of Bulgaria. The Ruhr example is often seen as a model for fair transition because no dismissals took place there but the phase-out period lasted for decades.
The other regions are at different stages of transition and the countries concerned still rely heavily on coal power plants. In Greece the lignite share in electricity production is 33 %, in Bulgaria the share of lignite or coal is 40 % and in Poland the share is as high as 76 %.
At the seminar, Michal Bieda, deputy mayor of Bytom, Poland called for much greater transparency and assistance from the Commission to help regions access EU support.
“For us the fund is a way to step out from the dependence on fossil fuels. We have already lost thousands of jobs in the past. We have now to consider the whole region and take on board all stakeholders,” he said.
Luc Triangle, secretary-general of IndustriALL, a federation of trade unions in Europe, agreed that the whole community must be considered when planning a just transition.
“We must ensure a future for our industry and social acceptance of the transition will be crucial. Currently, there is a lot uncertainty among workers. Just transition is an abstract concept and needs to be made concrete. If you close a coal mine or coal power plant, what will be the future of the workers and their children?”
The role of natural gas
Aleksandra Tomczak works in the cabinet of Frans Timmermans, who is Executive Vice-President for the European Green Deal. She pointed to a decline in coal generation in 2019.
“It’s an economic fact and not a political decision that coal already is phasing out. This time the phasing out will be much faster. It doesn’t make economic sense to keep coal mines and plants and subsidize them with taxpayers’ money,” she said.
The Brussels Times asked her if she saw a role for natural gas as a temporary solution during the transition period, e.g. to reach a reduction in green-house gas emissions in 2030, before achieving climate neutrality by 2050?
“Natural gas isn’t included in our proposal,” she replied. “The just transition fund isn’t about energy but social cohesion. To replace revenues, municipalities should invest in renewable energies. We don’t want to support investments in assets that will be obsolete in the future.”
Luc Triangle, the trade union representative, remarked that it is not a simple yes or no question. “We need also to think about how to generate electricity for our industries in the future. Natural gas is part of the broader energy mix.”
“The Commission has taken up our proposal about a just transition but it needs to be better defined, said Imke Lübbeke, Head of Climate at WWF European Policy Office.
“We need an economy-wide approach, not only just transition, based on a dialogue with all partners on local level. What worries us most is the lack of ambition in the process.”
In WWF’s view, investments in all fossil fuels should be excluded from all three pillars of the just transition mechanism. WWF has also called for increasing EU’s 2030 target for a reduction in emissions from 55 % to 65%. Among its policy recommendations in the report, it calls for clear timelines for the transition with early phase-out dates for coal.
The Brussels Times