ENERGY TRANSITION

The EU plans to cut greenhouse gas emissions by at least 50 % by 2030 and to achieve climate neutrality by 2050. This will require a transition from fossil fuels to renewable energy sources. In particular, it will mean phasing out coal, with impacts on jobs and regional economies. In order to support this energy transition, the von der Leyen Commission has proposed a Just Transition Mechanism as part of the European Green Deal. The idea of 'just transition' acknowledges the past contribution of industrial regions to economic prosperity and emphasizes the need to share the future costs of switching to a low-carbon and climate-resilient economy. The year 2020 will be the first time the EU plans to adopt targeted measures facilitating a just energy transition in its most affected region

The Just Transition Mechanism amounting to €100 billion was announced by the European Commission President, Ursula von der Leyen, as part of the European Green Deal, on 11 December 2019. The mechanism will support regions most affected by the energy transition, with funding coming from the InvestEU programme and the European Investment Bank. The mechanism will also include a new Just Transition Fund, initially proposed by the European Parliament in its resolution of March 2019, with financing coming from EU cohesion policy. The Commission's Executive Vice President, Frans Timmermans, is responsible for the climate action portfolio and European Green Deal, while the Commissioner for Cohesion and Reforms, Elisa Ferreira, has been tasked with designing the Just Transition Fund. The Commission priorities and mission letters suggest that support will be aimed at industrial, coal and energy-intensive regions. However, the exact scope and activities to be funded under the Just Transition Mechanism will be presented in the legislative proposals, which are scheduled to be put forward by the European Commission in January 2020.

The year 2020 is expected to see the adoption of the multiannual financial framework for 2021-2027 currently being negotiated . This raises the target of EU expenditure contributing to climate objectives to 25 % (from 20 % in the current 2014-2020 period ). As mentioned above, the European Green Deal will take shape through a set of new legislative proposals, including one on the Just Transition Mechanism. This collective effort is likely to bring Europe closer to achieving its long-term climate objectives, while also sending a political message on climate justice and solidarity with regions and workers most affected by the energy transition. Other EU programmes will also be adopted, providing potential funding sources ranging from social funding for re-skilling and job search support, investment opportunities in the energy and climate adaptation sector, and research on new clean technologies. These will include instruments such as InvestEU, the LIFE programme, Connecting Europe Facility, Horizon Europe, the European Globalisation and Adjustment Fund, the Modernisation Fund, the Reform Support Programme, and cohesion policy funds. Since various types of regions compete for these resources, the Just Transition Mechanism negotiated in 2020 could provide considerable support to mitigate the socioeconomic consequences of energy transition in the most affected regions of the EU.

Note

According to the 2018 Commission report on 'EU coal regions', in 2015 there were 128 coal mines in 12 Member States and 207 coal-fired power plants in 21 Member States. Direct employment in the coal sector amounts to 238 000 jobs (including 185 000 workers in coal mines and 53 000 workers in coal power plants). The regions with the highest number of direct jobs in the coal sector (mines and power plants) are located in Bulgaria, Czechia, Germany, Greece, Poland and Romania. Estimates show that indirect activities throughout the coal value chain, including power generation, equipment supply, services, research and development, and other dependent activities provide an additional 215 000 jobs, bringing the total employment in direct and indirect coal-related activities to almost half a million people.

It is estimated that by 2030, around 160 000 direct jobs in the coal sector may be lost. This corresponds to about two thirds of the current employment in direct activities only, with further job losses expected in the related sectors. Coal has been undergoing a phasing-out process, with production and consumption steadily declining since the 1990s, however, closures of mines and power plants are expected to accelerate in the coming decade. According to the 2018 Commission report on 'EU coal regions', the highest regional impacts of job losses in the coal sector are expected to be felt in Bulgaria, Germany, Greece, Poland, Romania and Spain. These losses may have particularly dire consequences in regions where the unemployment rate and the share of jobs at risk in the economically active population are high. Carefully planned transition strategies can facilitate the diversification of local economies, creation of new employment opportunities, especially in the renewable energy sector, and the development of new energy infrastructures.