Europe's Green Transition: A Fund Under Pressure

[Celerity]

The EU’s flagship Just Transition Fund, designed to mitigate social inequalities, faces significant challenges in achieving its ambitious goals.

https://www.socialeurope.eu/europes-green-transition-a-fund-under-pressure



In line with the Paris Agreement, the European Union (EU) aims to achieve climate neutrality by 2050. This objective necessitates profound shifts in energy production, technological development, and national economic structures, inevitably leading to significant social consequences, including job displacement. To ensure a fair and inclusive transition, the European Commission has introduced measures to support potentially affected regions, industries, and workers. The Just Transition Fund (JTF) stands as a pivotal initiative for this purpose. Approved in 2021, the JTF targets regions whose economies are reliant on coal extraction and highly polluting industries. Its remit includes diversifying these economies, fostering clean energy activities, promoting environmental remediation, and ensuring that workers receive appropriate training to adapt to new economic conditions, while also creating new employment opportunities.

Conceived as a cornerstone of the EU’s climate strategy, the JTF is a policy instrument designed to ensure that the transition to climate neutrality does not exacerbate existing social and territorial inequalities. It forms part of the broader European Green Deal and is a pillar of the Just Transition Mechanism. The JTF initially received a budget allocation of €17.5 billion, which was later increased to €19.3 billion. Today, it represents one of the main efforts to reconcile climate ambition with social justice – at least in theory. Indeed, this twofold objective, supporting decarbonisation while ensuring fairness, demands more than mere financial transfers. It requires a fundamental rethinking of economic development itself, particularly in territories historically dependent on fossil fuel industries. The JTF aims not merely to cushion the blow of transition but to create the conditions for long-term structural change. Yet, as implementation proceeds, a growing body of evidence points to a significant gap between the fund’s ambitious rhetoric and its practical application.

A New Generation of Industrial Policy?

The JTF marks a departure from traditional forms of industrial and cohesion policy in Europe. It can be understood as a “third generation” industrial policy: one that is explicitly socially inclusive, territorially embedded, and transformative. Earlier waves of industrial policy often focused narrowly on enhancing competitiveness, technological upgrading, or correcting market failures. By contrast, the JTF’s underlying logic is profoundly political – it acknowledges that the green transition will produce “losers” and that addressing their needs is essential to preserving social cohesion and democratic legitimacy. What makes the JTF unique is its territorial dimension, which often refers to a sub-regional unit. Funding is distributed based on Territorial Just Transition Plans (TJTPs), developed by national and regional authorities in consultation with local stakeholders.

These plans are intended to map the economic, social, and environmental profile of each region, identify at-risk sectors, and articulate a strategy for creating new opportunities. The JTF embodies a place-based approach that promotes development, participatory governance, and coordination across institutions. At its best, the JTF provides a template for how the EU can pursue a green transition that is not only efficient but equitable. At its worst, it risks becoming a fragmented and technocratic instrument, disconnected from the real needs and aspirations of local communities. As discussions on the future of the JTF unfold, it is worth analysing some preliminary evidence.

Italy, Germany, and Spain: Towards a Just Transition..........................

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