The European Commission and the European Investment Bank (EIB) have signed the agreement on the Public Sector Loan Facility, the third pillar of the Just Transition Mechanism, that will finance public investments in the regions most affected by Europe’s transition to a climate-neutral economy. It will combine up to 10 billion euros in EIB loans with 1.5 billion euros in EU budget grants.
The agreement paves the way for the territories and regions most affected by Europe’s transition to a climate-neutral economy to benefit from grants and loans under a Public Sector Loan Facility. This facility is part of the European Green Deal’s Just Transition Mechanism, which aims to support a fair shift away from fossil fuels while leaving no one behind, including communities that have relied on coal mining and polluting industries.
The Public Sector Loan Facility offers public sector entities planning investment projects in affected regions a combination of EIB loans and EU grants, to reduce the financial burden on public coffers. To be eligible, projects must be located in or benefit territories that Member States have identified in their Commission-approved territorial just transition plans as facing the biggest challenges related to moving away from fossil fuels and carbon-intensive industries. In less developed regions (those with a GDP per capita of less than 75 per cent of the EU average), the EU grant component can be up to 25 per cent of the EIB loan amount for each project.
The agreement makes up to 10 billion euros in EIB financing available by 2027 to spur investment to reduce the socioeconomic costs of the transition, facilitating the creation of new businesses, jobs and infrastructure. It follows the call for proposals for the EU grants component under the facility launched by the European Commission in July. Potential beneficiaries can also request advisory support from the InvestEU Advisory Hub to prepare and implement projects.
“The transition to a net zero emissions economy entails profound socioeconomic challenges for all of us and especially for those regions that heavily depend on carbon-intensive activities today,” said EIB Vice-President Ricardo Mourinho Félix said.
“Big challenges require all stakeholders to combine and coordinate their efforts so that their action can be impactful. That’s what we do here by blending EIB and European Commission funds and by working closely with public entities in just transition regions,” he underlined adding that making full use of the facility will help regions transform their economies in a way that is acceptable to societies.
Commissioner for Cohesion and Reforms Elisa Ferreira noted that the Cohesion Policy will help delivering the European Green Deal’s objectives in a fair way. “Thanks to this agreement with the EIB, the Public Sector Loan Facility will offer public authorities in the regions and territories that most need support preferential lending conditions for projects that do not generate sufficient revenue to be financially viable,” she pointed out.
Public sector entities will have the chance to find out more about how to benefit from the EU grant and the EIB loan at a virtual Info Day event on 14 September organised by the European Climate, Infrastructure and Environment Executive Agency (CINEA) with the participation of the European Commission’s department for regional and urban policy (DG REGIO) and the EIB.