EU Commission proposes a public loan facility to support green investments

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The European Commission has today presented a proposal for a public sector loan facility encouraging investments that support the transition towards a climate-neutral economy by public sector authorities to the benefit of coal- and carbon-intensive regions.

The facility will include €1.5 billion in grants from the EU budget and up to €10 billion in loans from the European Investment Bank’s own sources. The facility will mobilise up to between €25 and €30 billion of investments for helping territories and regions most affected by the transition to a climate-neutral economy, prioritising those that have less capacity to deal with the costs of the transition.

The facility will be accessible to all Member States, through calls for proposals that meet the following criteria:

  • projects benefit territories identified in an approved territorial just transition plan;
  • projects receive an EIB loan under the facility; and
  • projects do not generate sufficient market revenue streams.

Projects must also comply with the lending policy of the EIB. Investment areas will include energy and transport infrastructure, district heating networks, public transport, energy efficiency measures and social infrastructure, and other projects that can directly benefit the communities in the affected regions and reduce the socio-economic costs of the transition towards a climate-neutral Europe by 2050.

The territorial just transition plans are currently being prepared by the Member States and will be approved by the European Commission. They will provide the framework for support from the three pillars of the Just Transition Mechanism: a Just Transition Fund which will provide grants, a special scheme under InvestEU to crowd in private investment, and the public sector loan facility now being proposed. The Commission is providing technical support for the development of their territorial just transition plans to all 18 Member States that requested it.

Next steps

Today’s proposal will be negotiated with the European Parliament and the Council in view of its rapid adoption. The first calls for projects are expected to be launched after the adoption and entry into force of the public loan facility, and the approval of the territorial just transition plans. Ahead of the first call, an administrative agreement will need to be signed with the European Investment Bank in order to set out the implementation arrangements of the facility.

Members of the College and the Vice-President of the European Investment Bank said:

Executive Vice-President for an Economy that Works for People, Valdis Dombrovskis, said: “Today we are making good on our promise to provide financial support to less advantaged regions to help them to transition to a more climate-neutral economy. This loan facility will focus on boosting public investments that can contribute to the green transition in parts of Europe that are more carbon-intensive and grappling with greater socio-economic challenges – investments that would otherwise not happen. I call on Member States and the European Parliament to endorse this proposal, as well as the Just Transition Fund, as part of our efforts to ensure we make the European economy greener and more resilient.”

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