COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Sustainable Europe Investment Plan European Green Deal Investment Plan
Date: 2020-01-14
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: EU budget, EU environmental policy, EU growth strategy, EU investment, State aid, climate change policy, environmental cost, green economy, investment promotion, sustainable development

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 14.1.2020  COM(2020) 21 final  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Sustainable Europe Investment Plan    European Green Deal Investment Plan  
 
 
1. 

INTRODUCTION  

The  European  Green  Deal  is  the  European  Union’s  response  to  the  climate  and 
environmental-related  challenges  that  are  this  generation’s  defining  task.  It  is  a  new 
growth  strategy  that  aims  to  transform  the  EU  into  a  fair  and  prosperous  society,  with  a 
modern,  resource-efficient  and  competitive  economy  where  there  are  no  net  emissions  of 
greenhouse  gases  in  2050,  where  the  environment  and  health  of  citizens  are  protected,  and 
where economic growth is decoupled from resource use.  

The Sustainable Europe Investment Plan is the investment pillar of the European Green 
Deal.  A  sustainable  Europe  requires  significant  investment  effort  across  all  sectors  of  the 
economy. Reaching the 2030 climate and energy targets1 will require additional investments 
of EUR 260 billion a year by 20302. The Commission has already announced its intention to 
present  an  impact  assessed  plan  to  further  increase  the  EU’s  climate  ambition  for  2030  and 
additional investments will be necessary for achieving the broader environmental and social 
objectives that the EU has set itself3.  

Investor  appetite  for  sustainable  opportunities  with  measurable  impact  is  on  the  rise. 
The annual global issuance of green bonds has tripled since 2016, reaching around EUR 225 
billion  in  2019  according  to  the  recent  estimates.  A  framework  is  needed  to  bridge  the  gap 
between policy objectives and the significant private financial resources available.  

The Sustainable Europe Investment Plan will mobilise through the EU budget and the 
associated  instruments  at  least  EUR  1  trillion  of  private  and  public  sustainable 
investments over the upcoming decade. It puts forward a comprehensive framework for the 
sustainability  transition  from  every  corner  of  the  EU.  This  framework  will  target  climate, 
environmental  and  social  investments,  the  latter  as  far  as  they  are  related  to  the  sustainable 
transition.  

However, more is needed to master the challenges ahead. Private actors will need to provide 
the scale. By pulling together a set of new policy initiatives with reinforced commitments on 
ongoing  instruments  within  a  single  policy  framework,  the  Commission  gives  a  new  policy 
push  in  this  area,  and  ensures  enhanced  impact  and  coherence  of  the  EU  framework  for 
sustainable investments. The Commission  will continue to  work on how to further mobilise 
resources to achieve the objectives of the Green Deal. 

1   The key targets for 2030 are: at least 40% cuts in greenhouse gas emissions (from 1990 levels), at least 32% 

share for renewable energy and at least 32.5% improvement in energy efficiency. 

2   Compared to a baseline scenario – United in delivering the Energy Union and Climate Action - Setting the 

foundations for a successful clean energy transition (COM(2019) 285).  

3   The  Commission  estimates  that,  beyond  climate-related  measures,  the  broad  environmental  sustainable 
investment  gap  is  between  EUR  100  billion  and  EUR  150  billion  annually,  including  environmental 
protection  and  resource  management.  With  respect  to  social  investments,  the  High-level  taskforce  on 
investing in social infrastructure has estimated that additional EUR142 billion per year would be needed for 
affordable housing,  health and long-term care, education and life-long training. These do not relate to  the 
cost of supporting the green transition exclusively. 

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Figure 1. The Investment Plan within the European Green Deal 

The Sustainable Europe Investment Plan will enable the transition to a climate-neutral, green 
economy across the following three dimensions: 

  First,  the  Plan  will  mobilise  at  least  EUR  1 trillion  of  sustainable  investments 
over the next decade through the EU budget. The EU budget will devote a greater 
share of public spending to climate and environment than ever before. It will crowd in 
private  funding  through  guarantees  and  help  make  the  transition  a  just  one  by 
facilitating  public  sector  investments  in  the  regions  most  affected  by  the  transition 
through the Just Transition Mechanism.  

  Second, it will create an enabling framework for private investors and the public 
sector. It will aim to ensure a cost-effective, just, as well as socially balanced and fair 
transition.  Financial  institutions  and  private  investors  need  to  have  the  tools  to 
properly  identify  sustainable  investments.  Notably,  the  EU  taxonomy,  the  energy 
efficiency  first  principle  and  sustainability  proofing  will  be  key  to  leverage  their 
firepower.  For  the  public  sector,  the  European  Semester,  the  Environmental 
Implementing  Review,  the  National  Energy  and  Climate  Plans  under  the  Energy 
Union,  and  the  plans  required  under  the  sectoral  environmental  legislation  (e.g.  on 
waste, water, biodiversity and air) will allow to properly identify investment needs.  
  Third,  the  Plan  will  provide  tailored  support  to  public  administrations  and 
project promoters in identifying, structuring and executing sustainable projects. 
Support  for  public  authorities  to  assess  the  financial  needs  and  plan  the  subsequent 
investment  as  well  as  direct  support  to  public  and  private  project  promoters  will  be 
reinforced.  

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Figure 2. The Sustainable Europe Investment Plan 

The  Sustainable  Europe  Investment  Plan  contributes  to  the  implementation  of  the 
Sustainable  Development  Goals.  This  is  consistent  with  the  commitment,  in  the  European 
Green  Deal  Communication,  to  put  the  Sustainable  Development  Goals  at  the  heart  of  the 
EU’s policymaking and action. 

2.  THE INVESTMENT CHALLENGE  

The  transition  to  a  climate-neutral,  climate-resilient  and  environmentally  sustainable 
economy  will  require  significant  investments.  Achieving  the  current  2030  climate  and 
energy targets requires EUR 260 billion additional investments annually4. This figure mainly 
includes energy-related investments, buildings and part of the transport sector (vehicles)5. The 
average  investment  needs  per  sector6  are  most  significant  in  the  renovation  of  buildings. 
These investment flows would need to be sustained over time.  

Significant investments will be also necessary in other sectors, notably in agriculture, to tackle 
broader environmental challenges, including biodiversity loss and pollution, the protection of 
natural capital and the support to the circular and blue economy, as well as for human capital 
and social investments related to the transition.   

4   Compared to a baseline scenario - COM(2019) 285. 
5   For  transport,  the  data  include  the  total  investment  expenditure  in  mobile  assets,  but  not  investment  in 
infrastructure  and  in  systems  facilitating  sharing  of  vehicles  etc.  The  figures  do  not  include  the  updated 
technology costs assumptions used for the long-term strategy. 

6   These are to be considered as conservative estimates. Important investment needs in agriculture or climate 
adaptation  or  the  preservation  and  restoration  of  ecosystems  and  biodiversity  are  not  included  due  to  a 
current lack of data. 

3 

 
 
 
 
                                                           
Digitalisation  is  a  key  enabler  for  the  Green  Deal.  Substantial  investment  in  European 
strategic digital capacities, as well as in the development and wide deployment of top digital 
technologies  will  deliver  smart,  innovative  and  tailored  solutions  to  tackle  climate-related 
concerns. 

The  plan  announced  in  the  European  Green  Deal  to  raise  the  EU’s  greenhouse  gas 
emission  reductions  target  further  for  2030  will  translate  into  even  bigger  investment 
needs. The in-depth analysis in support of the Commission’s long-term strategic vision for a 
EU  climate-neutral  economy  already  indicated  that  the  transformation  to  a  low  carbon 
economy may require additional investments of up to 2% of GDP by 2040. This may need to 
be advanced to achieve a higher ambition already by 2030. 

3.  FUND: MOBILISING SUSTAINABLE INVESTMENT FROM ALL SOURCES 

As  the  investment  pillar  of  the  European  Green  Deal,  the  Sustainable  Europe 
Investment Plan will mobilise at least EUR 1 trillion of sustainable investments over the 
next decade. This amount of financing for the green transition is achieved through spending 
under the EU’s long-term budget, a quarter of which will go to climate-related purposes, and 
including estimated EUR 39 billion for environmental expenditures. Moreover, the Plan will 
crowd in additional private funding through leveraging the EU’s budget guarantee under the 
InvestEU Programme.  

In  addition  to  the  EU  spending  related  to  climate  action  and  environmental  policy,  the 
Sustainable Europe  Investment  Plan also  covers  the amounts used under  the Just  Transition 
Mechanism, which will help the most affected regions going through the transition.  

The  European  Investment  Bank  will  become  the  Union’s  climate  bank.  It  has  announced  it 
will  gradually  increase  the  share  of  its  financing  dedicated  to  climate  action  and 
environmental sustainability to reach 50% of its operations in 2025. Co-operation with other 
financial institutions will also be crucial.  

While this contribution shows the commitment of the EU to fund the European Green Deal, it 
will on its own not be sufficient to unlock the needed investments. Sizeable contributions will 
be needed from national budgets and the private sector. 

4 

 
 
 
 
 
 
 
 
 
Figure 3: Financing elements making up at least EUR 1 trillion over the next decade7 
under the Sustainable Europe Investment Plan 

7   The  figures estimated are a simple extrapolation over 10  years of  the Commission proposal for the 2021-
2027  multi-annual  financial  framework  (MFF),  without  prejudice  to  the  future  MFF  post  2027,  while 
assuming that the climate ambition will be at least maintained. 

5 

 
 
 
 
 
                                                           
How will the EU budget mobilise at least EUR 1 trillion over the next decade? 

Mobilising  at  least  EUR  1  trillion  over  the  next  decade  requires  a  combination  of  funds 
provided  by  the  EU  budget  as  proposed  by  the  Commission  and  further  public  and  private 
investments triggered by it.  

Climate and environmental spending under the EU budget will provide EUR 503 billion 
from 2021 to 2030, in line with the 25% climate mainstreaming target proposed for the 2021-
2027  multiannual  financial  framework  (MFF)  and  including  spending  on  the  environment 
across  all  programmes8.  This  will  trigger  additional  national  co-financing  of  EUR  114 
billion over this timeframe on climate and environment.  

The  InvestEU  Fund  will  leverage  around  EUR  279  billion  of  private  and  public  climate 
and  environmentally-related  investments  over  the  period  2021-2030  by  providing  an  EU 
budget guarantee to reduce the risk in financing and investment operations. 

To leave no one behind, the Just Transition Mechanism will include financing from the EU 
budget, co-financing from the Member States as well as contributions from InvestEU and the 
EIB  to  reach  EUR  100  billion  of  investments  to  be  mobilised  over  2021-27,  which, 
extrapolated over 10 years, will reach EUR 143 billion to ensure a just transition.  

The  Innovation  and  Modernisation  funds,  which  are  not  part  of  the  EU  budget  but  are 
financed through a part of the revenues from the auctioning of carbon allowances under the 
Emissions Trading Scheme, will provide at least some EUR 25 billion for EU transition to 
climate neutrality. 

3.1.  An increased ambition of the EU budget and associated programmes 

Under its proposal for the next EU Multiannual Financial Framework, the Commission 
has proposed to increase the climate-related ambition to 25%. The Commission calls on 
the  European  Parliament  and  the  Council  to  maintain  at  least  this  level  of  ambition  in  the 
ongoing negotiations. 

The different programmes, as proposed by the Commission for the next EU Multiannual 
Financial Framework, will include specific measures to strengthen the link between the 
implementation of the EU budget and the objective of a greener, carbon-free Europe, for 
example: 

  The  Cohesion  Fund  and  the  European  Regional  Development  Fund  are  expected  to 
invest  at  least  EUR  108 billion  in  climate  and  environment  related  projects  over  the 
next 7 years (2021-2027), more than 30% of the total envelope.  

  The future Common Agriculture Policy will direct 40% of its total envelope to support 
climate-related  objectives.  All  direct  payments  will  be  conditional  to  enhanced 
environmental and climate requirements.  

8   European  Agricultural  Fund  for  Rural  Development,  European  Agricultural  Guarantee  Fund,  European 

Regional Development Fund, Cohesion Fund, Horizon Europe and Life funds. 

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  At  least  35  %  of  the  budget  of  Horizon  Europe  (expected  to  reach  EUR  35  billion)  
will  support  climate  objectives.  Furthermore,  in  the  last  year  of  Horizon  2020,  the 
Commission is preparing an additional call of around EUR 1 billion allocated to Green 
Deal priorities, on top of the existing allocation of EUR 1.35 billion in 2020. 

  The  LIFE Programme will  see its envelope increased by 72% as  compared to  2014-
2020  to  EUR  5.4  billion.  More  than  60%  of  its  envelope  will  pursue  climate 
objectives, including EUR 0.95 billion for climate action, EUR 1 billion for the clean 
energy transition and EUR 2.15 billion for nature and biodiversity. 

  At least 60% of the Connecting Europe Facility budget (supporting transport, energy 

and digital infrastructures) will be targeted to support climate objectives. 

  The European Social Fund + will support the upskilling and re-skilling of an estimated 

5 million people for green jobs and the green economy. 

The EU budget will contribute to achieving climate objectives also through the revenue 
side. In May 2018, the Commission put forward a proposal  for an Own Resource Decision, 
which included a basket on new Own Resources. One of its key elements is the non-recycled 
plastic-packaging waste own resource which will contribute to the EU-wide targets defined in 
the Waste strategy. Furthermore, under the Commission proposal, 20% of the revenues from 
the auctioning of EU Emissions Trading System (ETS) would be allocated to the EU budget 
as an Own Resource. 

Additionally,  the  EU  Emissions  Trading  System  Modernisation  Fund  and  Innovation 
Fund, both financed outside the EU’s long-term budget, will channel additional money 
to the green transition. The Innovation Fund will support investments in scaling up break-
through  low-carbon  technologies  and  processes  in  renewable  energy  and  energy  intensive 
industries, including carbon capture, use and storage, and energy storage.  The aim is to share 
the innovation risk with project promoters to support first-of-a-kind highly innovative projects 
and to make European industry a global leader in these clean technologies. The Commission 
is  currently preparing the first  call for the  Innovation Fund that should be launched in  mid-
2020 with a volume of EUR 1 billion. Several workshops will take place over the next months 
to  reach  out  to  project  promotors  and  other  private  and  public  investors  with  a  view  to 
develop a set of effective selection criteria. The Modernisation Fund will support investments 
in modernising the power sector and wider energy systems, boosting energy efficiency in 10 
lower-income Member States. It can also support the re-skilling and up-skilling of the people 
affected. The Commission will soon consult on the implementing rules for the Modernisation 
Fund.  The  Commission  will  review  both  instruments  as  part  of  the  revision  of  the  EU 
Emissions Trading System and will consider the allocation of additional revenues to the EU 
budget to strengthen the financing of the just transition. 

In line with the European Green Deal communication, the Commission will present by 
summer  2020  an  impact  assessed  plan  to  increase  the  EU’s  greenhouse  gas  emission 
reduction targets for 2030, including an analysis of the investment needs. Depending on the 
outcome thereof, it could be appropriate to consider potential changes to the climate-related 
targets in the next Multiannual Financial Framework. 

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The Commission will: 

-  Defend  a  high  climate  ambition  of  at  least  25%  of  the  Multiannual  Financial 

Framework in the inter-institutional negotiations. 

-  Enhance the tracking system for monitoring progress towards this target. 

3.2.  Crowding in private investments through InvestEU 

Some investments needed for the transition entail more risk than the private sector can 
bear  alone.  This  is  where  public  funds  can  be  used  in  a  targeted  manner  to  de-risk 
projects and leverage private financing.  By providing an EU budget guarantee to partially 
cover the risk of financing and investment operations, the InvestEU programme, the successor 
of the European Fund for Strategic  Investments  and 13 other EU financial instruments,  will 
mobilise  EUR 650 billion over 7 years. InvestEU must be used to its full potential to support 
the  objectives  of  the  European  Green  Deal.  Achieving  an  ambitious  climate  target  for 
InvestEU  in  the  context  of  the  ongoing  inter-institutional  negotiations  is  therefore  essential. 
The Commission  has proposed a target  of at  least  30%, which would trigger  approximately 
EUR 195 billion of climate investment from 2021 until 2027, i.e. close to EUR 28 billion per 
year and 280 billion over a decade.  

InvestEU will support sustainable investments in all sectors of the economy. It will also 
diffuse  sustainable  practices  among  private  and  public  investors.  The  Commission  will 
put  forward  a  climate  tracking  methodology  for  measuring  the  contribution  of  specific 
financing  and  investment  operations  to  the  climate  and  environmental  objectives  of  the 
programme. In addition, it will put in place a method for ‘sustainability proofing’, on the basis 
of  which  promoters  of  projects  above  a  certain  size  will  be  required  to  assess  the 
environmental, climate and social impact of those projects. As these methods will be applied 
by  all  InvestEU  Implementing  Partners  (the  European  Investment  Bank  Group,  National 
Promotional Banks and Institutions,  International Financial Institutions) and will also be the 
reference  point  for  private  investors  and  financial  intermediaries  participating  in  the 
programme, they are expected to spill-over beyond the InvestEU Programme. These methods 
will  make  appropriate  use  of  the  EU-wide  classification  system  for  environmentally 
sustainable economic activities (‘EU taxonomy’).  

The Commission will: 

-  Enhance  the  climate  and  environmental  tracking  and  the  sustainability 
proofing  guidance  in  the  second  half  of  2020.  These  guidance  documents  will 
use in an appropriate way the criteria established by the EU taxonomy after its 
entry into force. 

-  Develop,  in  cooperation  with  InvestEU  implementing  partners,  financial 
products  to  be  deployed  under  InvestEU  that  will  target  environmental, 
climate and social sustainability. 

8 

 
 
 
 
3.3.  The European Investment Bank’s contribution and mobilising other financial 

institutions  

The  European  Investment  Bank  (EIB)  also  plays  a  key  role  in  financing  the  shift  to  a 
carbon-neutral, sustainable economy.  It uses its own resources and EU budgetary support 
under  various  programmes  and  facilities  to  finance  climate  action  and  environmental 
investments  both  inside  and  outside  the  EU.  In  2018,  almost  30%  of  the  EIB-signed 
operations contributed to climate action, supporting investments in climate change mitigation 
and  adaptation,  low-carbon  and  climate-resilient  growth.  For  2019,  the  EIB  expects  this 
contribution  to  have  been  in  the  range  of  28-31%.  For  the  duration  of  the  Sustainable 
European  Investment  Plan  over  a  decade,  the  EIB  is  expected  to  finance  outside  of  EU 
mandates around EUR 600 billion of climate investments across all Member States.  

The role of the EIB in  financing the sustainable transition will  grow as it becomes the 
EU  climate  bank.  The  EIB  will  gradually  increase  the  share  of  its  financing  dedicated  to 
climate  action  and  environmental  sustainability  to  reach  50%  by  2025  and  beyond.  A 
significant share of this will be carried out under the InvestEU Programme, which will allow 
the EIB to engage in more innovative, higher policy-added value projects, by covering a part 
of the risk of financing and investment operations. Moreover, the EIB Group will align all its 
financing activities with the principles and goals of the Paris agreement by the end of 2020. A 
first  step  in  that  direction  was  the  adoption  of  the  new  Energy  Lending  Policy  on  14 
November 2019, which prioritises lending to energy efficiency, renewable energy, new green 
technologies and new types of energy infrastructure required for the future low carbon energy 
system.  The  revised  Energy  Lending  Policy  also  foresees  the  phasing  out  of  the  support  to 
energy  projects  reliant  on  fossil  fuels  after  end  of  2021,  including  notably  all  natural  gas 
infrastructure projects. 

Other  International  and  National  Financial  Institutions  will  play  an  increasing  role  in 
financing sustainability in line with EU policy objectives.  The Commission will therefore 
work closely with them to explore how their activities could be aligned more closely with the 
European Green Deal objectives. 

The Commission will: 

-  Ensure  that  EIB  operations  financed  under  EU  mandates  provide  high 
additionality,  both  in  terms  of  sectors  covered  and  of  the  risk  profile  of 
financed  projects.  This  will  be  done  notably  by  enhancing  the  reporting  and 
monitoring system, including the climate-tracking methodology. 

-  Engage  with  other  International  and  National  Financial  Institutions  with  the 
aim  of  aligning  their  activities  more  closely  with  the  European  Green  Deal 
objectives. 

4.  ENABLE: CREATING A FRAMEWORK FOR PUBLIC AND PRIVATE INVESTMENTS TO COME 

ABOUT. 

The European Green Deal sets a clear direction for a comprehensive policy framework 
for  the  transformation of  the EU  economy.  The  2050  climate  neutrality  objective  will  be 
enshrined in legislation and the ambition for greenhouse gas emission reductions in 2030 will 
be  raised.  The  European  Green  Deal  policies  will  use  a  mix  of  regulation  and  incentives  to 

9 

 
 
address externalities and implement the “polluter pays” principle, so that costs for society are 
reflected  in  investment  decisions.  The  EU  Emissions  Trading  System  will  be  reviewed  and 
will  further  help  to  ensure  effective  carbon  pricing.  Specific  initiatives  will  address  sector-
specific  regulatory  barriers,  such  as  obstacles  to  the  funding  and  execution  of  energy 
efficiency  investments  in  the  building  sector.  Competitive  and  integrated  markets  are  also 
necessary  to  keep  costs  down  and  trigger  innovation.  Similarly,  the  European  Innovation 
Council  under  Horizon  Europe  will  contribute  to  public-private  investment  in  breakthrough 
innovation in support of the European Green Deal.  

Within  this  broader  context,  the  Sustainable  Europe  Investment  Plan  will  enable  the 
transition  through  targeted  actions  in  areas  that  directly  touch  upon  investment 
decisions of private investors and public entities.   

4.1.  Putting sustainable finance at the heart of the financial system 

Since  private  companies  and  households  will  have  to  provide  the  bulk  of  the  sustainable 
investments  in  the  next  decade,  it  is  crucial  to  put  in  place  clear  long-term  signals  to  guide 
investors to sustainable investment.  

In  order  to  address  the  significant  amount  of  investments  needed  to  reach  the  EU’s 
climate and broader sustainability objectives, the Commission proposed in March 2018 
the  Action  Plan  on  financing  sustainable  growth.9  Based  on  this  Action  Plan,  which 
contributes  to  building  a  Capital  Market  Union,  important  foundations  for  conducive 
frameworks to mobilise finance for sustainable investments have been put in place. This is the 
case notably of the EU taxonomy, of disclosures on sustainability by the financial sector, as 
well as of climate benchmarks. Through international co-operation, e.g. via the International 
Platform on Sustainable Finance, the EU is promoting coherent approaches and an enhanced 
impact of sustainable finance globally. 

The Commission welcomes in particular the recent political agreement by co-legislators 
on  the  Regulation  establishing  a  framework  to  facilitate  sustainable  investment  (EU 
taxonomy), to be further specified  through delegated acts adopted by the Commission. 
The  EU  Taxonomy  will  determine  whether  an  economic  activity  is  environmentally 
sustainable,  based  on  performance  criteria  for  its  contribution  to  at  least  one  of  the  six 
environmental objectives.  

The Commission will  also  explore how the EU taxonomy can be used in the context of 
the European Green Deal by the public sector, beyond InvestEU. While initially designed 
for  private  investors,  the  taxonomy  –  once  sufficiently  developed  –  could  also  be  used  by 
public  sector  entities.  It  is  important  that  there  is  convergence  of  standards  between  the 
private sector and the public banks/entities, for example the European Investment Bank.  

Building  on  the  2018  Action  Plan  and  in  light  of  the  European  Green  Deal,  the 
Commission will present a renewed strategy for sustainable finance in the third quarter 
of  2020,  aiming  at  scaling  up  sustainable  finance  even  further.  Companies  will  need  to 
increase  their  disclosure  of  climate  and  environmental  data  so  that  investors  are  fully 
informed about sustainable investment opportunities and can better direct their investment in 
support  of  the  Green  Deal.  To  this  end,  the  Commission  will  review  the  Non-Financial 
Reporting  Directive.  Furthermore,  the  renewed  strategy  will  further  increase  investment 

9   COM(2018) 97 final. 

10 

 
 
                                                           
opportunities by facilitating the identification of sustainable investments through clear labels 
for a variety of sustainable investment products and by developing and implementing an EU 
green bond standard.  

The Commission will:  

-  Prepare in 2020 the delegated acts on the climate change objectives of the EU 
Taxonomy  in  2020  and  the  delegated  acts  on  the  other  environmental 
objectives of the EU taxonomy by the end of 2021. 

-  Explore  how  the  EU  taxonomy  can  be  used  in  the  context  of  the  European 

Green Deal by the public sector, beyond InvestEU. 

-  Launch a public consultation on a renewed sustainable finance strategy in the 
first quarter of 2020 with the view to presenting a renewed strategy in the third 
quarter of 2020.  

-  Establish an EU Green Bond Standard, in 2020 and explore how this standard, 
as well as other enabling frameworks, can increase public and private finance 
for sustainable investments. 

4.2.  Providing the public sector with guidance and appropriate means for making 

sustainable investments  

Public  actors  are  the  main  investors  in  certain  sectors,  especially  infrastructure  and 
public  services.  In  many  cases,  public  authorities  need  to  play  a  guiding  and  coordinating 
role  for  sustainable  investments.  Public  authorities  may  also  need  to  invest  when  market 
actors  cannot  step  in,  in  particular  when  the  social  and  environmental  benefits  are  not 
reflected  in  private  returns,  or  when  projects  are  considered  too  risky.  Where  these 
investments often have a cross-border nature and spill-over effects across Member States, the 
Commission needs to play a coordinating role at the EU level. 

The European Semester provides a well-established framework for the coordination of 
economic  and  employment  policies  that  will  facilitate  the  necessary  investment  for  the 
green transformation from the EU and its Member States. The Semester contributes to the 
identification of investment priorities and barriers in each Member State. The country reports 
will  match  the  available  sources  of  financing  through  EU  funds  with  the  country-specific 
challenges identified in the reports, among others in view of climate, environmental and social 
policy objectives. A joint effort between the EU and its Member States should ensure that the 
investments are directed to the most sustainable projects.  

The  Commission  will  work  with  the  Member  States  to  screen  and  benchmark  green 
budgeting  practices.  This  will  make  it  easier  to  assess  to  what  extent  annual  budgets  and 
medium-term fiscal plans take environmental considerations and risks into account, and learn 
from  best  practices.  The  review  of  the  European  economic  governance  framework  will 
include  a  reference  to  sustainable  public  investment  in  the  context  of  the  quality  of  public 
finance. This will inform a debate on how to improve EU fiscal governance. The outcome of 
the debate will form the basis for any possible future steps including how to treat sustainable 

11 

 
 
 
investments  within  EU  fiscal  rules,  while  preserving  safeguards  against  risks  to  debt 
sustainability.   

The Commission will propose minimum mandatory green criteria or targets for public 
procurements  in  sectorial  initiatives,  EU  funding  or  product-specific  legislation.  Such 
minimum  criteria  will  ‘de  facto’  set  a  common  definition  of  what  a  ‘green  purchase’  is, 
allowing collection of comparable data from public buyers, and setting the basis for assessing 
the impact of green public procurements. Public authorities across Europe will be encouraged 
to integrate green criteria and use labels in their procurements. The Commission will support 
these efforts with guidance, training activities and the dissemination of good practices. At the 
same  time,  life-cycle-costing  methodologies  should  be  applied  by  public  buyers  whenever 
possible.  The  Commission  calls  on  all  players,  including  industry,  to  develop  such  reliable 
methodologies.  

The energy efficiency first principle should be applied to ensure that energy efficiency is 
taken into account wherever relevant. This would also help avoid waste of resources linked 
to the generation, transmission, distribution and use of energy that is actually not needed. The 
Commission will provide guidance on how to apply this principle. 

The Commission will: 

- 

Include environmental sustainability as an integral part of the country reports 
under the European Semester as of this year. 

-  Help  Member  States  identifying  their  sustainable  investment  needs  and 

possibilities for funding them each year as of 2020. 

- 

In  cooperation  with  Member  States  screen  and  benchmark  green  budgeting 
practices. 

-  Propose further legislation and guidance to green public procurement. 

-  Provide  guidance  on  the  application  of  the  energy  efficiency  first  principle  as 

part of the investment decisions.  

4.3.  Enabling sustainable investments through a supportive State Aid framework.  

The relevant State aid rules will be revised by 2021 in light of the policy objectives of the 
European  Green  Deal  and  support  a  cost-effective  and  socially-inclusive  transition  to 
climate neutrality by 2050. State aid rules will be revised to provide a clear, fully updated 
and fit-for-purpose enabling framework for public authorities to reach these objectives, while 
making  the  most  efficient  use  of  limited  public  funds.  State  aid  rules  will  support  the 
transition  by  fostering  the  right  types  of  investment  and  aid  amounts.  They  will  encourage 
innovation and the deployment of new, climate-friendly technology at market scale. As part of 
this, the Commission will also consider further procedural facilitation to approve State aid for 
just  transition  regions.  They  will  also  facilitate  the  phasing  out  of  fossil  fuels,  in  particular 
those that are most polluting, thus ensuring a level-playing field in the internal market. This 
will include, in particular, the Environmental and Energy State aid guidelines.  

12 

 
 
 
Pending the revision, Member States can continue to use the flexibility provided under 
existing  rules  to  achieve  their  2030  targets  and  the  further  decarbonisation  of  the 
electricity sector and the economy by 2050. For example, they can choose to increase public 
investments in renewable electricity schemes for cheaper and more integrated green energy, 
the  roll-out  of  cheaper  and  publicly  accessible  charging  infrastructure  or  circular  economy 
schemes such as the reuse of waste heat or recycling of waste. 

Similarly, Member States can continue to rely on existing State aid rules to alleviate the 
social and regional consequences from decarbonisation measures.  For example, they can 
choose to support workers affected by the closure of coal mines, invest in small and medium-
sized  enterprises  and  start-ups,  or  in  the  up-  and  reskilling  of  workers.  For  key  enabling 
technologies  and  breakthrough  innovation,  Member  States  can  pool  their  funds  to  unlock 
significant  private  investments  to  make  important  projects  of  common  European  interest  a 
reality – including in the regions most affected by the green transition. 

At the same time, the rules will continue to preserve the integrity of the internal market, 
while allowing to respect the cohesion objectives enshrined in the EU Treaty, which are 
at  the  heart  of  European  integration.  Their  aim  is  to  reduce  disparities  between  the 
development  levels  of  the  various  regions,  by  supporting  the  least  favoured  regions  in 
catching  up.  In  particular,  this  means  that  public  productive  investment  support  to  large 
companies  must  continue  to  only  benefit  the  poorest  regions  to  be  affected  by  the  green 
transition (Article 107 (3) (a) and (c) TFEU). 

Against this background, current State aid rules will be applied with flexibility, focusing 
on  a  number  of  areas,  which  seem  crucial  to  achieve  the  transformation  to  a  climate-
neutral economy. 

4.3.1.  More  flexibility  for  State  aid  to  transform  to  climate  neutral  production 

processes 

The Commission will approve Member States’ support of companies to decarbonise or 
electrify  production  processes,  provided  that  economic  incentives  do  not  already 
warrant  the  investment  concerned  and  the  companies  reduce  their  impact  on  the 
environment beyond Union standards or benchmarks. 

investment  compared 

To  minimise  costs  to  the  State,  public  support  should  be  limited  to  what  is  necessary. 
The current Guidelines typically set the maximum aid amount based on the extra costs of the 
less 
relevant 
environmentally friendly. The Commission will assess whether, in the future, for investments 
that  are  compatible  with  the  transition  to  climate  neutrality  it  could  instead  determine  the 
eligible  costs  by  reference  to  the  funding  gap  in  particular  in  cases  where  there  is  not  a 
hypothetical  alternative  investment.  This  could  be  justified  in  light  of  the  Green  Deal 
objectives and the fact that such investments present an important way to reduce the carbon 
footprint of the installations concerned and help achieve climate neutrality. 

theoretical  alternative 

investment 

to  a 

that 

is 

4.3.2.  Aid to improve energy efficiency for buildings 

Member  States  will  be given  more  scope  to  invest  in  the  energy  efficiency  of buildings 
under  the  Guidelines  for  environmental  protection  and  energy.  In  particular,  Member 
States will be given more flexibility to support financing arrangements that are advantageous 
to consumers of electricity, such as Energy Performance Contracts.  In such an arrangement, 

13 

 
 
energy  service  companies  invest  in  the  upgrading  of  buildings  to  make  them  more  energy-
efficient and are remunerated through the energy savings in the consumer’s electricity bill. 

Member States will also have more flexibility to support upgrades that both address the 
energy-efficiency  of  buildings  and  invest  in  renewable  energy  generation  for  self-
consumption.  

For  the  identification  of  the  eligible  costs  for  such  projects,  the  Commission  may  take 
into account the fact that in many cases there is no counterfactual investment.  

4.3.3.  Aid for district heating 

Support,  which  is  limited  to  district  heating  distribution  networks,  can  under  certain 
circumstances  be  considered  to  fall  outside  of  State  aid  control  as  an  infrastructure 
measure which does not affect competition and trade. This could in particular be the case 
when district heating networks are run in the same way as other energy infrastructure through 
separation from the heating generation, third-party access and regulated tariffs.  

In  all  other  cases,  where  State  aid  is  present,  the  Guidelines  for  environmental 
protection  and  energy  establish  a  series  of  conditions  under  which  support  for  district 
heating projects can be approved. In particular, the rules require that the investment leads to 
an energy efficient district heating system, as defined in the Energy Efficiency Directive. As 
regards  the  amounts,  which  can  be  granted,  the  Guidelines  differentiate  between  aid 
intensities  for  the  investments  costs  for  the  district  heating  installations  and  the  so-called 
funding gap method for the financing of construction or upgrades of the distribution network.  

To  unlock  the  potential  of  district  heating  to  contribute  to  the  transition  to  a  climate-
neutral economy, Member States can in the future use a funding gap approach also for 
the  district  heating  generation  as  alternative  to  the  maximum  aid  intensities  set  in  the 
Guidelines for environmental protection and energy.  

Member  States  could  also  be  allowed  to  grant  State  aid  to  district  heating  networks, 
which are not part of energy efficient district heating systems if investments that make the 
heat  generation  energy  efficient  will  start  within  three  years  of  the  modernisation  of  the 
network. 

4.3.4.  Aid for closure of coal fired power plants  

Burning  lignite  is  one  of  the  most  polluting  and  CO2-intensive  means  of  electricity 
generation.  While  the  EU  Emissions  Trading  System  will  lead  to  a  reduction  of  carbon 
intensive power production, a number of Member States are planning to accelerate the phase 
out hard coal and lignite fired power plants. Member States that choose to provide aid to close 
coal-fired  power  plant  in  this  context,  for  example  to  compensate  operators  for  foregone 
profits as they cannot continue to sell electricity on the market, should notify such plans to the 
Commission. The Commission will assess State aid involved in such projects directly under 
the Treaty.  

In  this  context,  the  Commission  will  in  particular  examine  the  proportionality  of  such 
support  in  order  to  avoid  overcompensation.  This  means  that  Member  States  need  to 
demonstrate  that  the  compensation  does  not  go  beyond  the  loss  of  profit  faced  by  the 
installation  due  to  its  anticipated  closure.  It  is  also  important  to  ensure  that  the  measure  is 
structured in a way that limits to the minimum any distortion of competition in the market. 

14 

 
 
It  should  be  recalled  that  any  State  support,  which  is  not  related  to  economic  activity,  in 
particular for the benefit of individuals (e.g. social aid or for re-skilling) or the financing of a 
publicly  available  infrastructure,  does  not  fall  under  State  aid  rules,  as  long  as  it  does  not 
confer an indirect advantage to any undertaking. 

4.3.5.  Aid for the circular economy 

Member States will be given more scope to support measures needed for the shift from a 
linear economy to a circular economy: recycling of waste, re-use of waste heat, re-use of 
CO2, or the separate collection of waste streams. This flexibility would apply provided that 
the  aid  amount  is  determined  taking  into  account  any  additional  revenues  that  circular 
economy investments can deliver. 

The Commission will: 

-  Continue  effective  implementation  of  State  aid  rules,  which  are  key  enablers 
for  the  transition  and  apply  the  current  rules  with  flexibility  in  areas  crucial 
for the transition to a climate-neutral economy. 

-  Revise State aid rules by 2021 to reflect the policy objectives of the European 
Green Deal, supporting a cost-effective transition to climate neutrality by 2050. 

5.  EXECUTE: CREATING A PIPELINE OF SUSTAINABLE PROJECTS   

In  the  current  context  of  high  market  liquidity,  the  challenge  is  to  develop  a  robust 
pipeline of investment projects aligned with the European Green Deal. The availability of 
investment projects that are compatible with the expectations and requirements from investors 
does  not  yet  match  the  demand.  Financing  resources  available  are  not  exhausted.  Advisory 
support  to  project  promoters  has  shown  to  be  very  effective  in  bridging  the  gap  between  a 
concept and an economically sound project. 

On the basis of the established priorities, technical assistance and advisory support will 
help identify and prepare sustainable projects and provide capacity building to project 
promoters to facilitate access to finance. This will be organised at different levels from the 
support to  public administrations in  defining their investment  plans to support of individual 
public and private project promoters in developing and implementing their specific projects.  

5.1.1.  Supporting administrations 

The  Structural  Reform  Support  Programme  (and  its  successor,  the  Reform  Support 
Programme)  will  provide  technical  support  to  Member  States  to  help  design  and 
implement  reforms  to  achieve  the  twin  climate  and  digital  transitions.  Limited 
administrative  capacity,  awareness  and  sustainability  expertise  of  public  administrations  at 
national, regional and local level in Member States is one of the major barriers holding back 
investment in sustainable infrastructure and environment protection. The Programme will help 
identify  investment  potentials  in  clean  energy,  or  actions  aimed  at  increasing  the  pace  of 
energy  efficiency  investments  in  buildings.  Through  the  Reform  Support  Programme,  the 

15 

 
 
 
 
 
Commission  also  supports  Member  States  in  setting  out  action  plans  on  circular  economy, 
green budgeting or sustainable finance and investments.  

5.1.2.  Supporting project promoters  

At the project promoter level, the InvestEU Advisory Hub and the advisory initiatives 
developed  under  the  InvestEU  Programme  with  a  total  budget  of  EUR  500  million  as 
proposed by the Commission, will support the identification, preparation, development, 
structuring, procuring and implementation of investment projects. Where needed, it can 
also  enhance  the  capacity  of  promoters  and  financial  intermediaries  to  implement  financing 
and  investment  operations.  This  comprehensive  service  offer  will  take  into  consideration 
sustainability related aspects.  

The  InvestEU  Advisory  Hub  will  provide  a  single  point  of  entry  for  both  public  and 
private  project  promoters,  and  to  financial  intermediaries  to  implement  financing  and 
investment operations for the benefit of entities that face difficulties in obtaining access 
to  finance.  Jaspers,  the  joint  Commission-European  Investment  Bank  initiative  for  project 
development  for  Structural  Funds  will  become  part  of  Hub.  Relevant  advisory  initiatives 
under the InvestEU Advisory Hub could include the continuation of European Local Energy 
Assistance programme under the InvestEU Advisory Hub to support local sustainable energy 
and  clean  transport  projects.  It  could  also  include  other  advisory  initiatives  under  the 
Sustainable  Infrastructure  Window  providing  support  for  designing  the  financing  and 
investment  operations  of  sustainable  projects  in  key  infrastructure  areas  (transport,  energy, 
environment,  broadband  and  digital  connectivity).  Specific  attention  will  also  be  paid  to 
technical assistance for projects promoting natural capital and nature-based solutions. 

Public investors will profit from tailor-made support on how to implement their projects 
in  practice.  A  newly  introduced  ‘Sustainable  Procurement  Screening’  instrument  –  on  the 
basis of the existing voluntary ex-ante mechanism for large infrastructure projects – will help 
them make use of all the possibilities to green their procurements and guarantee sustainability 
of  the  project  and  the  respect  of  the  highest  environmental  standards  throughout  the  supply 
chain. 

5.1.3.  Ensuring coherence and visibility 

The  Commission  will  ensure  that  the  support  to  public  administration  and  to  each 
project are provided in a coordinated way, where appropriate. The capacity building and 
strategic  planning  activities  by  the  Commission  are  showing  positive  results  that  could  be 
replicated  and  scaled  up  for  the  purpose  of  the  Green  Deal.  The  existing  close  cooperation 
between  the  Commission  services  and  the  European  Investment  Advisory  Hub  support  to 
national  promotional  banks  and  investment  projects  will  be  extended  under  the  relevant 
successor  programmes  of  the  next  Multiannual  Financial  Framework  to  reinforce  the 
generation and the realisation of sustainable investment project pipelines. 

The InvestEU Portal will build on the current European Investment Project Portal and 
continue to offer a free, online user-friendly portal, providing EU businesses and project 
promoters  in  search  of  financing with  the  visibility  and networking opportunities  they 
need towards investors worldwide. The focus of the Portal shall also be the provision of a 
pipeline of EU-based investment  projects  to  the InvestEU implementing  partners, who shall 
examine the projects falling within their geographical and activity scope.   

16 

 
 
 
 
 
 
The Commission will: 

-  Through  the  Reform  Support  Programme  provide  technical  support  to 
Member  States  to  help  design  and  implement  growth-enhancing  reforms, 
including the development of sustainable investment strategies.  

-  Through  the  InvestEU  Advisory  Hub  provide  tailored  advisory  services  to 

private and public promoters of sustainable projects. 

-  Propose  a  Sustainable  Procurement  Screening’  instrument  ensuring  the 

greening of public  infrastructure projects. 

6.  A JUST TRANSITION MECHANISM 

The  transition  to  a  sustainable  and  climate-neutral  economy  will  require  substantial 
investment  all  over  Europe  and  a  strong  policy  response  at  all  levels.  While  all  regions 
will  require  funding  for  the  green  transition,  the  transformation  will  pose  a  significant 
challenge  to  some  territories.  Climate  neutrality  will  require  a  fundamental  restructuring  of 
their economies, structural changes in business models, and new skill requirements. This must 
be acknowledged and addressed in a transition that leaves no one behind.   

Fossil fuel mining and exploration will face a significant decline and highly-greenhouse 
gas intensive activities will undergo a deep transformation. Regions and territories highly 
dependent  on  these  activities  will  need  to  restructure  their  industries,  ensure  that  new 
economic  activities  can  keep  the  economic  and  social  texture  together  and,  provide  the 
necessary  training  to  the  workers  concerned  to  find  new  jobs.  Without  the  necessary 
accompanying  measures,  the  transition  will  not  happen,  since  it  will  be  neither  just  nor 
socially sustainable. 

To  address  the  specific  challenges  encountered  by  some  regions,  the  Commission  is 
proposing a Just Transition Mechanism that provides targeted support to generate the 
necessary  investments  in  these  territories.  The  Just  Transition  Mechanism  will  consist  of 
three pillars:  

  a Just Transition Fund,  
  a dedicated just transition scheme under InvestEU, and  
  a  new  public  sector  loan  facility  for  additional  investments  to  be  leveraged  by  the 

European Investment Bank.  

17 

 
 
 
 
 
 
Figure 4. Financing the Just Transition Mechanism 

Each pillar will assist with different grant and financing instruments in order to offer a 
full range of support options in line with the needs to mobilise investments benefiting the 
most  impacted  regions.  To  ensure  coherence  between  the  three  pillars,  the  Just  Transition 
Fund will be used to provide primarily grants; the dedicated transition scheme under InvestEU 
will crowd in private investments, and the new just transition public sector loan facility will 
leverage  public  financing.  These  measures  will  be  accompanied  by  dedicated  advisory  and 
technical  assistance  for  the  regions  and  projects  concerned.  The  Just  Transition  Mechanism 
will include a strong governance framework centred on territorial just transition plans.  

Taken together, the components of the Just Transition Mechanism could help mobilize 
investment in the regions most exposed to transition challenges in the order of EUR 100 
billion over the period 2021-2027. All investments financed will be coherent with the Green 
Deal objectives. 

Additionally, the Commission will propose a revision of the Regulations on the Research 
Fund for Coal and Steel in order to enable the use a portion of the European Steel and 
Coal Community assets in liquidation. This will help with maintaining the annual research 
programme  of  at  least  EUR  40  million  as  well  as  to  enable  the  funding  of  large  clean 
steelmaking  R&I  breakthrough  projects.  Research  activities  in  the  coal  sector  will  focus  on 
regions in transition in line with the principles of the Just Transition Mechanism.  

18 

 
 
 
 
 
 
Further,  the  EU  ETS  Modernisation  Fund  will  complement  the  Just  Transition 
Mechanism.  Additional  EUR  14  billion  (subject  to  eventual  carbon  price  levels)  in  2021-
2030 will address the low-carbon investments in its ten beneficiary Member States (Romania, 
Bulgaria, Hungary, Latvia, Lithuania, Estonia, Czech Republic, Poland, Slovakia, Croatia). 

6.1.  Pillar 1: The Just Transition Fund 

The  Just  Transition  Fund  (JTF)  will  be  equipped  with  its  own  envelope  of  EUR  7.5 
billion  within  the  EU  budget,  which  comes  on  top  of  the  proposal  for  the  next 
Multiannual  Financial  Framework  made  by  the  Commission  in  May  201810  The  Fund 
will aim to alleviate the social and economic costs of the transition to climate neutrality.  

The  Commission  is  adopting  today  a  proposal  for  a  regulation  establishing  the  Just 
Transition  Fund,  as  well  as  a  proposal  for  targeted  amendments  to  the  Common 
Provisions  Regulation.  To  unlock  one  euro  from  the  Just  Transition  Fund,  each  Member 
State  will  be  required  to  allocate  a  minimum  of  1.5  and  a  maximum  of  3  euro  from  the 
European  Regional  Development  Fund  and  the  European  Social  Fund  Plus.  This  spending 
from  the  EU  budget  will  be  supplemented  by  national  co-financing  according  to  cohesion 
policy  rules.  This  could  bring  the  total  amount  of  public  funds  mobilised  through  the  Just 
Transition Fund to between EUR 30 and 50 billion. 

The Just Transition Fund will benefit territories with high employment in coal, lignite, 
oil shale and peat production, as well as territories with greenhouse gas-intensive industries, 
which will be either discontinued or severely impacted by the transition. The level of support 
will reflect the magnitude of the challenges in these territories, in terms of the need for both 
economic  diversification  and  transition  towards  zero  and  low-carbon  activities  with  growth 
potential, and the reskilling of workers in view of equipping them with the necessary skills to 
take on new jobs.  

The  Just  Transition  Fund  will  help  transform  these  regions,  which  will  be  essential  to 
reaching  carbon  neutrality  by  2050.  It  will  bring  together  spending  on  climate  action 
and  support  for  bridging  differences  between  and  inside  of  Member  States.  The  Just 
Transition Fund will therefore be implemented under cohesion policy, which is the main EU 
policy to reduce regional disparities and to address structural changes in Europe’s regions. It 
will be implemented through shared management in close cooperation with national, regional 
and local authorities and stakeholders. This will ensure ownership and provide the tools and 
structures for an efficient management framework. 

The Just Transition Fund will provide support to all Member States, with focus on those 
that  will  shoulder  the  biggest  transition  challenges.  Resources  will  be  allocated  among 
Member States based on the scale of the decarbonisation challenge of the highest greenhouse 
gas-intensive regions  (through the corresponding industrial emissions), the social  challenges 
in light of potential job losses in industry, coal and lignite mining and production of peat and 
extraction of oil shale, and the need for subsequent reskilling of workers. To ensure that the 
transition is fair and acceptable to all, the allocation will reflect the ability of Member States 
to address this challenge according to their level of economic development. 

10   COM(2019) 456 final. 

19 

 
 
 
                                                           
Member States will need to identify the eligible territories through dedicated territorial 
just  transition  plans,  in  dialogue  with  the  Commission  and  consistently  with  their 
National  Energy and Climate Plans. This  dialogue will be based on an assessment on the 
territories  most  affected  by  the  transition  to  climate  neutrality  and  the  employment  and 
economic  challenges  they  will  face,  as  identified  in  the  European  Semester.  Member  States 
will  take  into  account  that    assessment  for  the  elaboration  of  the  just  territorial  transition 
plans, outlining the transition process and the types of operations envisaged. These plans will 
be annexed to the Cohesion Policy programmes entailing support for the Just Transition Fund, 
and will be adopted by the Commission together with these programmes. 

To  ensure  the  most  effective  use  of  the  resources,  the  Just  Transition  Fund  will  be  able  to 
support  investments  in  the  transformation  of  existing  installations,  also  in  EU  Emissions 
Trading System sectors, only when these investments lead to substantial emission reduction, 
and  also  bring  a  positive  long-term  contribution  to  the  job  situation  in  the  territories 
concerned, in line with the territorial transition plans. 

Territorial just transition plans – the centrepiece of the Just Transition Mechanism 

Territorial just transition plans will be at the centre of the Just Transition Mechanism, and a 
reference  for  all  of  its  pillars.  These  plans  will  set  out  the  social,  economic,  and 
environmental challenges stemming from the phasing out of fossil fuel-related activities, or 
decarbonising  greenhouse  gas-intensive  processes  or  products.  They  will  also  give  an 
outline  of  the  transition  process  until  2030,  including  development,  reskilling  and 
environmental rehabilitation needs and the approach to tackle them in an integrated manner, 
the transition timeline, the types of operations envisaged and governance mechanisms. This 
means  that  the  measures  to  be  supported  by  the  Just  Transition  Fund  might  differ  among 
Member  States  and  territories  with  regard  to  the  priorities  and  challenges  identified.  The 
programming  process  will  be  based  on  the  assessment  provided  in  the  context  of  the 
European  Semester.  Taking  into  account  this  assessment,  Member  States  will  prepare 
territorial  just  transition  plans,  which  will  be  part  of  the  programmes  under  the  Just 
Transition  Fund.  The  approval  of  the  plans  by  the  Commission  will  open  the  doors  to 
dedicated financing not only from the Just Transition Fund (pillar 1 of the Just Transition 
Mechanism), but  also  from  the dedicated just transition  scheme under  InvestEU (pillar 2) 
and the public sector loan facility  by the EIB (pillar 3). 

6.2.  Pillar  2:  A  dedicated  scheme  for  just  transition  regions  under  the  InvestEU 

Fund 

The  Just  Transition  Mechanism  will  also  comprise  a  dedicated  just  transition  scheme 
under InvestEU, to generate additional investment to benefit the most affected regions. 
This will allow new economic activities to replace those that need to be phased out because of 
their effect on the climate and environment. Compared to the Just Transition Fund, it will also 
enable  investments  in  a  wider  range  of  projects,  in  line  with  the  broader  eligibility  of 
investments  under  InvestEU.  InvestEU will support financing, among others, to  projects  for 
energy and transport infrastructure, including gas infrastructure and district heating, but also 
decarbonisation  projects,  economic  diversification  of  the  regions,  social  infrastructure  and 
skills.  It  will  also  allow  the  affected  sectors  to  adapt  quicker  to  climate-friendly  production 
modes. Financing under InvestEU can support economically viable investments in these areas, 
providing complementarity and synergies with the Just Transition Fund.    

20 

 
 
  
The  InvestEU  Fund  as  it  stands  is  expected  to  trigger  EUR  650  billion  of  additional 
private and public investment to support EU policy objectives in the next MFF through 
an EU guarantee of EUR 38 billion. This guarantee is supported by a combination of an EU 
budget  of  EUR  15.2  billion  (i.e.  40%  provisioning  rate)  and  contingent  liabilities  for  the 
remaining amount. 

The  InvestEU  Fund  can  be  an  efficient  tool  for  generating  significant  additional 
investments in just transition projects in the regions concerned. To this effect, a portion of 
the financing under the InvestEU Fund will be focused on the just transition objectives. This 
could generate up to  EUR 45 billion of investments over the period 2021-2027 to support the 
transition in the regions concerned, aiming at reflecting the national allocation key under the 
Just Transition Fund. However, the final use of InvestEU will remain demand-driven and will 
depend on the project pipeline. The absorption capacity of the regions concerned will be key 
in achieving the objectives. The overall target of EUR 45 billion correspond to a provisioning 
of  around  EUR  1.8  billion  from  the  EU  budget  for  the  InvestEU  Programme.  Moreover, 
Member  States  will  be  able  to  contribute  part  of  their  Just  Transition  Fund  allocation  to 
support investment through guaranteed loans or equity via their Member State compartment.  
Tailored  advisory  support  to  develop  the  pipeline  of  projects  will  be  needed.  In  order  to 
achieve this, it is essential to ensure an adequate level of InvestEU guarantee in the on-going 
MFF negotiations. 

Projects  in  the  regions  having  an  approved  transition  plan  under  the  Just  Transition 
Fund Regulation, or projects that benefit those regions (even if they are not located in 
the regions themselves), can benefit from the scheme, but only when funding outside the 
just  transition  territories  is  key  to  the  transition  in  those  territories.  This  is  relevant  in 
particular for transport or energy infrastructure projects that improve the connectivity of the 
just transition territories. Investments pursuing the just transition objectives can count toward 
climate objectives and contribute to the achievement of the 30% climate objectives set out for 
the InvestEU Programme. 

Such  targeting  of  the  InvestEU  guarantee  to  the  just  transition  objectives  will  unlock 
eligible investment under all four policy windows and will be reflected in the underlying 
financial products. Dedicated incentives for Implementing Partners may be offered via fees 
or more advantageous risk coverage for projects to be implemented in transition regions. The 
just  transition  objective  target  will  be  included  in  the  InvestEU  Investment  Guidelines  and 
guarantee  agreements  with  the  Implementing  Partners.  Moreover,  the  call(s)  for  proposals 
addressed  to  Implementing  Partners  under  the  InvestEU  Fund  will  prioritise  those 
Implementing  Partners  offering  financial  products  that  contribute  to  the  just  transition 
objectives.  Dedicated  technical  assistance  will  be  provided  to  make  projects  investable 
through  the  InvestEU  Advisory  Hub,  for  which  an  additional  envelope  will  be  made 
available. 

6.3.  Pillar  3:  A  public  sector  loan  facility  with  the  European  Investment  Bank 

Group  

A public sector loan facility with the European Investment Bank will support increased 
public sector investment in the regions undergoing climate transition. This support will 
offer  concessional  loans  to  the  public  sector.  These  loans  would  provide  public  sector 
entities with resources to implement measures to facilitate the transition to climate neutrality. 
Supported  investments  will  range  from  energy  and  transport  infrastructure,  district  heating 
networks,  energy  efficiency  measures  including  renovation  of  buildings,  as  well  as  social 

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infrastructure, and can include other sectors as well. The EU support could take the form of 
inter alia an interest rate subsidy or an investment grant, financed from the EU budget, which 
will  be  blended  together  with  loans  extended  by  the  EIB  to  municipal,  regional  and  other 
public authorities.  

The  geographical  coverage  will  be  the  same  as  under  the  InvestEU  just  transition 
scheme  (pillar  2  of  Just  Transition  Mechanism),  i.e.  projects  in  the  regions  with  an 
approved  transition  plans  but  also  in  projects  benefiting  those  regions,  but  only  when 
funding  outside  the  just  transition  territories  is  key  to  the  transition  in  those  territories.  The 
just transition public sector loan facility is meant to offer such preferential funding conditions 
in order to support public sector investment to the benefit of the most affected regions. It will 
also include advisory support in order to help generate project pipeline. 

The  support  under  the  public  loan  facility  will  be  complementary  to  the  products 
offered by the InvestEU dedicated just transition scheme.  It will apply to projects, which 
do  not  sufficiently  generate  market  streams  of  revenue  and  that  otherwise  would  not  get 
financed without a subsidy element.  

With  the  contribution  from  the  EU  budget  of  EUR  1.5  billion  and  the  EIB  lending  of 
EUR  10  billion  at  its  own  risk,  the  public  sector  loan  facility  could  mobilise  between 
EUR  25  and  30  billion  public  investments  over  the  period  2021-2027.  This  reflects  the 
national allocation key under the Just Transition Fund, to support the transition in the regions 
concerned. The Commission will table a legislative proposal to set up this new public sector 
loan  facility  in  March  2020.  Over  time,  the  Commission  may  explore  co-operation  with 
additional implementing partners as public sector needs evolve.  

6.4.  Technical assistance and advisory support 

The just transition will not only depend on the money available to support investment, 
but  also  on  channelling  this  money  to  the  right  projects.  Assistance  will  be  provided  to 
Member States and regions through a Just Transition Platform, which will be managed by the 
Commission.  The  Platform  will  be  building  on  and  expanding  the  work  of  the  existing 
Platform for Coal Regions in Transition, which already supports fossil fuel producing regions 
across the EU in achieving a just transition. It will provide technical and advisory support for 
the  elaboration  of  the  territorial  transition  plans  through  an  expert  network  facilitating  the 
sharing  of  information  between  Member  States,  regions,  agencies  and  stakeholders.  The 
Commission  will  launch  already  in  the  first  quarter  of  2020  a  call  for  requests    under  the 
Structural Reform Support Programme to assist Member States with the preparation of their 
territorial  transition  plans  where  needed.  The  Just  Transition  Mechanism  will  also  provide 
advisory  support  and  technical  assistance  through  the  same  means  as  described  in  section 
5.1.2.  

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The Commission will: 

-  Engage  with  the  co-legislators  in  order  to  work  towards  the  quick  adoption  of  the 
Just  Transition  Fund  regulation  and  corresponding  amendments  of  the  Common 
Provisions Regulation. 

-Work  with  the  EIB  Group  and  other  implementing  partners  to  implement  the  just 
transition scheme under InvestEU once adopted. 

-  Table  a  new  legislative  proposal  for  a  public  sector  loan  facility  with  the  EIB  in 
March 2020. 

- Assist Member States and regions in the preparation of territorial transition plans. 

-  Provide  technical  assistance  and  advisory  support  in  order  to  generate  robust 
project pipeline to the benefit of just transition regions. 

7.  CONCLUSION AND NEXT STEPS  

The Sustainable Europe Investment  Plan is  instrumental in mobilising  the investments 
necessary  to  reach  the  ambitious  objectives  set  by  the  European  Green  Deal.  By 
committing to mobilise at least EUR 1 trillion of sustainable investments over the next decade 
through  the  EU  budget,  the  Commission  sets  a  very  concrete  objective  of  its  own,  against 
which  progress  will  be  monitored.  The  plan  also  includes  a  commitment  to  use  all  relevant 
policy  levers  to  provide  private  and  public  investors  with  a  framework  that  enables 
sustainable  investments  to  the  maximum  extent  possible.  It  also  entails  a  renewed 
commitment  to  provide  the  necessary  project  planning  and  execution  support  to  authorities 
and  project  promoters.  Given  the  magnitude  of  the  financing  needs,  the  Commission  is 
committed  to  further  explore  how  to  mobilise  additional  funding  to  achieve  the  European 
Green Deal objectives. 

The  Just  Transition  Mechanism  included  in  the  Plan  will  help  ensure  that  the  shift 
towards  a  sustainable  future  leaves  no  one  behind.  Regions  most  exposed  to  transition 
challenges will be assisted, both financially and administratively, in this endeavour.  

The success of the Sustainable Europe Investment Plan will depend on the engagement 
of all relevant stakeholders in its implementation.  It will be vital that Member States and 
the European Parliament maintain the high ambition of the Commission proposal during the 
negotiations  on  the  upcoming  financial  framework.  The  investment  community,  including 
institutional investors, banks, promotional institutions and private equity funds, are invited to 
make  full  use  of  the  emerging  framework  for  sustainable  investments.  Member  State 
authorities  in  turn  will  have  to  take  up  an  active  role  in  identifying,  promoting  and,  where 
needed, co-financing such investments. 

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Every  year  the  Commission  will  hold  a  Sustainable  Investment  Summit,  involving  all 
relevant stakeholders. The summit will be an opportunity to take stock of progress across the 
different work streams included in the Sustainable Europe Investment Plan, and identify new 
avenues for action. The Commission will continue exploring with relevant partners additional 
sources that could be mobilised to meet the long-term financing needs of the transition, and 
innovative ways to do so. Moreover, in line with the Council conclusions of December 2019, 
the  Commission  will  develop  and  provide  regular  assessments  of  the  environmental  and  
socio-economic impacts of the transition to climate neutrality and related investment needs to 
address those impacts, where needed. 

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