29th Sep 2023


EU's Just Transition Fund: Is it really helping workers and SMEs?

  • The Enel coal-fired power plant in southwestern Sardinia, Italy. (Photo: Matteo Barsantini)
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The European Union's Just Transition Fund (JTF), which allocates €17.5 billion for carbon-intensive regions to implement a fair and sustainable ecological transition by 2027, faces issues of delayed disbursement and accessibility for Small and Medium Enterprises (SMEs). This creates uncertainties about the future of workers and companies in these regions.

Our international team investigated the implementation of the JTF across seven European countries: France, Germany, Greece, Italy, Poland, Spain, and Sweden, aiming to provide a comprehensive picture of the current situation.

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Francisco Barros Castro, cabinet expert of the European Commissioner for Cohesion and Reforms, Elisa Ferreira, acknowledged the challenge for SMEs. He described EU rules as "complicated", a result of negotiations between multiple European institutions. Coupled with stringent regulations, some countries are already lagging in JTF implementation due to inadequate planning, time constraints for project proposals, and excessive bureaucracy.

Our team interviewed local bodies and stakeholders across seven European countries, who shared the challenges their regions face amid the ambitious Just Transition.

All member states are required to prepare Territorial Just Transition Plans (TJTPs) to access the fund and comply with the regulations established by the European Parliament and Council of Europe. Only Bulgaria has lost part of its JTF budget (€98 million) for not having a TJTP. Italy and Spain only finalised their plans in December, the last available month to do so.

In southwestern Sardinia (Sulcis), the JTF is delayed and hindered by bureaucracy. The metallurgic district of Portovesme, which has suffered an employment crisis in the last decade, is worsening due to rising energy prices and the impending coal phase-out. Enel's power plant Grazia Deledda, which fuels metal production in the district, plans to close by the end of 2025, potentially causing between 400 and 1,200 job losses. Despite €367 million of JTF investment, the workers' future remains unclear, sparking several protests in recent months. "Sulcis has a very low income per capita, probably one of the lowest in Italy, and everything is starting to shut down. If the power plant dies too, it is really over", Marco Pisu, an employee of Enel, told EUobserver.

Marco Pisu, employee of Enel. (Photo: Matteo Barsantini)

Local mayors also expressed concern, as past bureaucracy and poor management have already squandered significant investments intended to aid Sulcis. Mauro Usai, the mayor of Iglesias, the largest municipality of Sulcis, fears this trend will continue with the €367 million from the JTF. "There is total indifference and superficiality in the region to catch these fundamental resources" he said.

The executive director role of the Planning Regional Center (CRP), responsible for managing European resources in Sardinia, remained vacant for over four months. Even though a new director has been recently appointed, he cannot exercise his duties due to a bureaucratic issue: the region of Sardinia did not complete its financial report on time, so new hirings, including the CRP director, are blocked for at least another month. Consequently, the program is paralyzed, and no one in the Region can actively work on the JTF.

Delays have long been a reality in Asturias, northern Spain, which currently has 60,000 unemployed citizens. The closure of the carbon-based industry was signed in 2018. While some of the workforce was relocated to other regions, many found themselves in unstable working conditions, waiting for alternatives for four years. It was only in 2022 that these workers were offered environmental restoration and refurbishment jobs in their former mines and energy plants, but these opportunities will only last for two to three years, according to Jose Luís Alperi, secretary general of the Asturian worker and miners' trade union SOMA-FITAG. "Now we have lots of funds (...) the problem is if there will be enough projects that will absorb those funds." he said when asked about the JTF in this region.

He also explains how, due to past delays, workers do not trust any future promises of employment. "We are starting to see scepticism. People are very sceptical towards anyone who wants to present a project and claim they will create employment. Until they see tangible results they are not capable of believing it." he said.

Recently, Greek Prime Minister Kyriakos Mitsotakis announced the extension of energy production from lignite until 2028 due to the energy crisis. This decision raises concerns about potential delays in meeting various goals, including those set by the JTF.

Nikos Mantzaris, a member of the Committee on Climate Change Mitigation at the Ministry of Environment, suggests that although this decision may appear as a setback, lignite levels have remained steady for the past two years and the cessation of its use by 2028 has always been the plan. However, this extension does bring risks, such as the potential for the Ptolemaida V power station to remain in statistical reserve, or a significant administrative increase in operating hours for existing lignite units. Further, Greece, despite being the first country to submit territorial plans, has yet to proceed with program announcements for the majority of these plans and has not demonstrated transparency in fund allocation.

In the French region of Provence-Alpes-Côte d'Azur, companies only had from February to May 2023 to submit their projects following the JTF's introduction in the region. At a local information meeting, several companies voiced concerns about the insufficient time to submit projects by the May 9th deadline, questioning the region about the possibility of a second call for projects. However, others, like Gwenaël Kervajan, President of the sustainable development consulting firm Prosilience and General Delegate of Finef (a circular economy support platform), are not worried about deadlines. Having already submitted his application on March 30th, Kervajan believed in the importance of having a well-defined project and being aware of relevant calls for projects rather than trying to squeeze a project into a newly announced funding opportunity.

JTF Rapporteur and EU Parliament Member Siegfried Mureșan confirmed the existence of Europe-wide delays, attributing them to some EU states' lack of planning and administrative capacity and late management of funds from the 2014-2020 EU budget.

"Any delay is bad because countries could have used the money and created economic opportunity already, facilitating the transition and reducing dependency. Had they done these things, it would have been also useful in the context generated by the Ukrainian war," he told EUobserver.

The delays, caused by bureaucratic stagnation and short deadlines, create concerns among companies and workers. Further delays could lead to substantial financial losses and massive unemployment. For a successful green transition, these companies and workers must have access to the funding.

So, who can actually access the JTF?

The accessibility of funds varies across European countries. The JTF regulation primarily targets SMEs to help diversify the economy. Large enterprises can only access the funds under specific circumstances, which must be justified in their territorial plans.

In the Hauts-de-France region, while local bodies are thoroughly involved in the process, some are apprehensive since decarbonization projects are excluded from the JTF in the region. Frédéric Motte, a councillor in charge of the transformation of the regional economy and President of the REV3 Mission at the Hauts de France Regional Council, also expresses concern about the lack of projects. According to him, "it seems complicated to spend the entirety of the budget allocated by 2027."

Regions like Silesia in Poland, home to the largest hard coal mining operation in the entire EU, are struggling to create enough projects to utilise the fund and create new jobs to offset future job losses.

Miłosława Stępień, Just Transition Coordinator for the global NGO network Bankwatch and part of one of the JTF monitoring committees in Poland, details, "The main issue is that this is a huge amount of money and they don't have enough projects yet to fully utilise this funding (...) The European Commission is asking regions that have been suffering from brain drain and economic decline for the last 30 years to suddenly become the pioneering regions of transition."

In Germany, doubts surround the effectiveness of the JTF in supporting SMEs, especially in the Lusatia region. Given the region's economic model and the limited number of companies capable of research and development, questions are raised about which structures are eligible for support. Mayor Christine Herntier of Spremberg, and Horst Böschow, regional manager for the Association of Entrepreneurs in Brandenburg-Berlin, fear that the funds may not be distributed as planned due to the challenges SMEs encounter when applying, such as lack of time and personnel to write project applications. Moreover, in Saxony, the publication of funding guidelines is still pending, preventing companies from applying. Steffen Söll, an entrepreneur of a medium-sized special machinery manufacturer, emphasises that structural aids are being delivered too slowly and too late, particularly for companies.

The Swedish government, instead of focusing on the socioeconomic consequences of the green transition, has targeted industries with large emissions, such as the steel industry which accounted for 11% of emissions in 2021. Predominantly, larger and older companies will be able to access the funds, whereas new alternative fossil-free steel production initiatives, such as HYBRIT and H2 Green Steel, will not.

Jonas Lundström, operations manager at the region of Västerbotten, explains, "If we want Sweden to be a forerunner in steel production, it is important to consider alternative fossil-free steel production. With current regulations, these new projects are unable to access the funds." Sweden is a particular case where support for big companies is categorized as innovation and clean energy, hence it is not included in the chart below (for detailed types of allocations, see the JTF dashboard).

The situation in Greece contrasts with other European countries when it comes to supporting large enterprises. Major companies such as PPC, the leading electricity producer and supplier, and HELPE, the most important local petrochemical producer, are significantly involved in the Greek transition. It is plausible they may claim part of the funding in the future. Currently, CERTH, a major research centre, is the only known entity to receive part of the funding from the Just Development Transition Program, allocated for the establishment and development of a hydrogen (H2) innovation hub.

Regarding the funding of large enterprises, transparency is notably lacking in current management. A total of €380 million is intended to support businesses, but as Nikos Mantzaris, member of the Committee on Climate Change Mitigation, indicates, "We do not know what kind of businesses are being supported, there are no criteria. There is an opaqueness, we do not know exactly where the resources are going" Conversely, according to the mayor of Kozani, Lazaros Malourtas, and the former mayor Lefteris Ioannidis, SMEs have not demonstrated interest in the JTF at this time.

While SMEs grapple with accessing funds due to a lack of projects and time, large companies do not encounter the same problem. So despite being the primary target of the JTF, many SMEs might end up empty-handed.

Francisco Barros Castro, cabinet expert of Commissioner Ferreira's team, explains that "the conditions are very strict. Large companies need to demonstrate additionality in terms of employment, comply with environmental tools, ETS, etc."

The JTF is designed to assist those at risk due to the green transition. However, the planning and implementation have so far been marred by delays and unequal access to funds. As a result, workers and SMEs, who should be prioritised by the fund, risk being left behind. If these issues persist, the EU may fail to deliver on its promise of a fair green transition.

Author bio

This article is the first part of an investigation into the EU's Just Transition Fund and part of the "Crossborder Journalism Campus", an Erasmus+ project of the University of Gothenburg, Leipzig University, and the Centre de Formation des Journalistes in Paris. Additional reporting by Laura Lansche, Manon Krakowiak, and Sophia Seifert.

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