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Policy Contribution

How good is the European Commission’s Just Transition Fund proposal?

On 14 January 2020, the European Commission published its proposal for a Just Transition Mechanism, intended to provide support to territories facing serious socioeconomic challenges related to the transition towards climate neutrality. This brief provides an overview and a critical assessment of the first pillar of this Mechanism, the Just Transition Fund (JTF).

By: , , and Date: February 26, 2020 Topic: European Macroeconomics & Governance

This Policy Contribution was prepared for the European Parliament’s Committee on Regional Development (REGI) as an input to a REGI workshop on the Just Transition Fund on 19 February 2020. The original paper is available on the European Parliament’s webpage (here). Copyright remains with the European Parliament at all times.

  • The JTF is supposed to rely on €7.5 billion of ‘fresh money’ from the EU budget, to be complemented by funds from member states’ European Social Fund Plus (ESF+) and European Regional Development Fund (ERDF) envelopes, and by co-financing at the national level. All member states are eligible for the JTF, following the approval of their Territorial Just Transition Plans by the Commission. Funds are pre-allocated on a national level. Projects eligible for financing currently include projects aimed at economic revitalisation, social support and land restoration.
  • Given its small size, the JTF will not realistically be able to tackle effectively all three priorities. That is why we believe that it should fundamentally be amended to maximise its impact: funds should be allocated on a project basis (similar to the European Globalisation Adjustment Fund) rather than sprinkled all across Europe on a geographical basis.
  • To be sure that the JTF fulfils its objective on mitigating the social and economic costs of the transition to a climate-neutral economy, we also recommend the following amendments to the regulation:
    − Restrict eligible activities to social support and, to a lesser extent, land restoration;
    − Under social support, upskilling and reskilling policies should be combined with efforts to collect, harmonise and disseminate regional labour data; pension-bridging grants and mobility grants could also be added to the list of eligible activities;
    − Eligibility for land restoration support should be restricted to sites where a company is no longer able to pay for restoration itself, to respect the polluter-pays principle;
    − Use NUTS3-level data in the allocation formula rather than NUTS2-level data, to ensure that all territories in need of help are counted in the JTF allocation fomula;
    − Remove the mandatory transfer of ERDF funds into the JTF envelope and instead require member states to devote a portion of ERDF funds to the economic revitalisation of regions affected by the transition and identified by JTF allocation criteria, as a complement to the social support provided by the JTF.
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External Publication

European Parliament

Data flows, artificial intelligence and international trade: impacts and prospects for the value chains of the future

In-depth briefing and analysis on the issues of digital trade and the geopolitics of trade provided to the European Parliament.

By: Dennis Görlich, Michèle Finck, Georgios Petropoulos, Niclas Poitiers and André Sapir Topic: European Macroeconomics & Governance, European Parliament Date: November 26, 2020
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Parliamentary Testimony

European Parliament

Socio-economic effects of digital trade and artificial intelligence on EU industries including their value chains and EU imports and exports with major trade partners

Testimony before the European Parliament on the subject of digital trade.

By: Georgios Petropoulos and André Sapir Topic: European Parliament Date: November 16, 2020
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Blog Post

Next Generation EU payments across countries and years

How much cake does everyone actually get and at what speed? This blogpost estimates the yearly Next Generation EU (NGEU) payments to each EU country at current prices in euros and as a share of GNI.

By: Zsolt Darvas Topic: European Macroeconomics & Governance Date: November 12, 2020
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Policy Contribution

European Union recovery funds: strings attached, but not tied up in knots

Ensuring effective recovery spending is a high-stakes challenge for the European Union, with the potential for derailment because of fuzzy objectives and overloaded procedures. The EU should work with member countries to identify limited policies that will maximise the impact of EU investment, while accounting for spillovers.

By: Jean Pisani-Ferry Topic: European Macroeconomics & Governance Date: October 27, 2020
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Blog Post

The European climate law needs a strong just transition fund

To deliver on the goals of the European climate law, the European Union needs finally to get coal out of its energy mix: the EU should quicken the pace of decarbonisation whilst delivering on its goal of social inclusion.

By: Simone Tagliapietra Topic: Energy & Climate Date: October 6, 2020
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Opinion

Europe’s recovery gamble

Next Generation EU, was rightly hailed as a major breakthrough: never before had the EU borrowed to finance expenditures, let alone transfers to member states. But the programme and its Recovery and Resilience Facility amount to a high-risk gamble.

By: Jean Pisani-Ferry Topic: European Macroeconomics & Governance, Finance & Financial Regulation Date: September 25, 2020
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External Publication

How Can the European Parliament Better Oversee the European Central Bank?

This paper, written at the request of the Committee on Economic and Monetary Affairs, assesses how the European Parliament holds the European Central Bank accountable. The same exercise is done for the Bank of Japan, in order to identify possible lessons for the ECB and the European Parliament.

By: Grégory Claeys and Marta Domínguez-Jiménez Topic: European Macroeconomics & Governance, Global Economics & Governance Date: September 23, 2020
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Blog Post

Redefining European Union green bonds: from greening projects to greening policies

European Union green bonds, as promised by European Commission president Ursula von der Leyen, might be better linked to the bloc's achievement of its climate goals, rather than project-by-project green criteria.

By: Georg Zachmann Topic: Energy & Climate Date: September 21, 2020
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Policy Contribution

Financing the European Union: New Context, New Responses

With the European Union for the first time taking on debt to help finance the economic recovery from the coronavirus, new resources are needed to fund the EU budget. Various ideas have been floated – including a digital tax and a financial transactions tax – but the most appropriate new resource would be revenues from the EU emissions trading system, which could provide enough funding to repay the EU's coronavirus borrowing.

By: Clemens Fuest and Jean Pisani-Ferry Topic: European Macroeconomics & Governance Date: September 11, 2020
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Blog Post

EU recovery plans should fund the COVID-19 battles to come; not be used to nurse old wounds

In its proposed Recovery Fund, the European Commission uses allocation criteria mainly linked to infection rates and past economic performance. To foster an efficient economic rebound post COVID-19 crisis, we propose instead to allocate funds through a forward-looking approach based on specific industrial and economic structure of EU regions.

By: Carlo Altomonte, Andrea Coali and Gianmarco Ottaviano Topic: European Macroeconomics & Governance Date: July 6, 2020
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Podcast

Podcast

Redefining Europe’s role after the Covid-19 Pandemic

How will the Covid 19 crisis change the role of the EU in Europe and the world?

By: The Sound of Economics and Bruegel Topic: European Macroeconomics & Governance Date: June 25, 2020
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External Publication

European Parliament

Political Assessment of Possible Reactions of EU Main Trading Partners to EU Border Carbon Measures

This briefing was prepared for the European Parliament’s Committee on International Trade (INTA).

By: Henrik Horn and André Sapir Topic: Energy & Climate, European Macroeconomics & Governance, European Parliament, Global Economics & Governance Date: June 23, 2020
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