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: Date: October 6, 2020 Topic: Energy & Climate

 

The European Parliament will vote this week (7 October) on the Commission’s proposal for a European climate law, which would make binding a goal for the European Union of climate neutrality by 2050 and an intermediate emissions reduction target of at least 55% by 2030, compared to 1990. After the Parliament, it will be the turn of EU leaders to have their say with a deal now expected at the European Council meeting in December.

As discussed in a recent blogpost, the adoption of the European climate law would be an important and necessary step in the EU decarbonisation process. But climate neutrality by 2050 will not be easy, and Europe should prepare for a bumpy road.

Coal remains a major political bottleneck in the EU decarbonisation process. Although the EU energy system is becoming greener and more efficient, coal continues to provide a fifth of its electricity. In certain countries, coal is still predominant in electricity generation. Unsurprisingly, these same countries have doubts about speeding up the decarbonisation process, especially in midst of a pandemic.

 

Fig. 1 Coal in Europe: a fifth of the electricity, three quarters of the sector’s emissions (2018 data)

Source: Bruegel on Eurostat (2020) and UNFCCC (2020) 

 

The EU should openly face this bottleneck and actively promote a quick phasing out of coal by putting in place a just transition scheme that would guarantee the social welfare of coal miners who stand to lose their jobs and aid the socio-economic transformation of Europe’s coal regions.

In 2019, the European Commission proposed a Just Transition Fund (JTF) as a cornerstone of the European Green Deal. In May 2020, the Commission proposed to fund the JTF with €43 billion, €32 billion of which would be fresh funds from Next Generation EU.

But in July 2020 EU leaders decided to more than halve the JTF to €17.5 billion, a major downside of the European Council agreement that saw substantial cuts to planed Next Generation EU investment in EU public goods (health, research and international cooperation as well as the JTF). The European Parliament disagrees, calling instead for €57 billion in funding for the JTF.

Ongoing negotiations on the EU’s budget for 2021-2027 should result in a stronger JTF, as the instrument represents an important element in ensuring the social inclusiveness and political acceptability of the EU decarbonisation process, especially as it speeds up in the coming decade.

The JTF should not only be sizeable but also well-designed. It is particularly important to: i) focus the JTF on social support for citizens in transitioning territories, especially by ensuring that training meets local labour needs and by enabling JTF funding for mobility and pension bridging grants that would complement national social safety nets; ii) make sure JTF resources are disbursed on the basis of a due implementation of countries’ decarbonisation plans; iii) change the JTF’s pre-allocation method to make it more geographically targeted.

By providing an answer to the challenge of a just transition, the EU could eliminate the major stumbling block posed by coal to its path to decarbonisation. After years of discussion, it is now high time for the EU to deliver and foster two major societal goals: decarbonisation and social inclusion.

Recommended citation:
Tagliapietra, S. (2020) ‘The European climate law needs a strong just transition fund’, Bruegel Blog, 06 October


Republishing and referencing

Bruegel considers itself a public good and takes no institutional standpoint. Anyone is free to republish and/or quote this post without prior consent. Please provide a full reference, clearly stating Bruegel and the relevant author as the source, and include a prominent hyperlink to the original post.

Read article More by this author
 

Opinion

Why China should fear the EU's carbon border tax

Expect Beijing to soon start lobbying against the proposal.

By: Alicia García-Herrero Topic: Energy & Climate, Global Economics & Governance Date: July 26, 2021
Read article More on this topic More by this author
 

External Publication

A Safety Net for the Green Economy

How to protect workers hurt by the fight against climate change.

By: Simone Tagliapietra Topic: Energy & Climate Date: July 20, 2021
Read article More by this author
 

Blog Post

The European Union’s carbon border mechanism and the WTO

To avoid any backlash, the European Union should work with other World Trade Organisation members to define basic principles of carbon border adjustment mechanisms.

By: André Sapir Topic: Energy & Climate, Global Economics & Governance Date: July 19, 2021
Read article More on this topic
 

Blog Post

Making sure green household investment pays off

Policies are needed to support green fuel switching by households; support should be phased out as the carbon price rises.

By: Ben McWilliams and Georg Zachmann Topic: Energy & Climate Date: July 19, 2021
Read about event More on this topic
 

Upcoming Event

Sep
1
12:30

The EU recovery fund - state of play and outlook

Bruegel Annual Meetings, Day 1- In this session we will discuss the EU recovery fund, its state of play and outlook.

Speakers: Nadia Calviño, Karolina Ekholm and Guntram B. Wolff Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels
Read about event More on this topic
 

Upcoming Event

Sep
2
10:15

The role of the state in providing infrastructure for decarbonisation

Bruegel Annual Meetings, Day 2 - Who should be responsible for providing crucial infrastructure for decarbonisation and how should it be managed?

Speakers: Jean-Bernard Lévy, Diederik Samsom, Simone Tagliapietra, Laurence Tubiana and Georg Zachmann Topic: Energy & Climate Location: Palais des Academies, Rue Ducale 1
Read about event
 

Upcoming Event

Sep
3
10:15

Sustainable finance

Bruegel Annual Meetings, Day 3 - In this session on the final day of the Meetings, our panelists will discuss the future of finance and its sustainability.

Speakers: Maria Demertzis, Alberto De Paoli, Pierre Heilbronn and Alexandra Jour-Schroeder Topic: Energy & Climate, Finance & Financial Regulation Location: Palais des Académies, Rue Ducale 1, Brussels
Read article More on this topic More by this author
 

Podcast

Podcast

A fitting plan for the European Green Deal?

How does the world's first roadmap for meeting climate goals stack up?

By: The Sound of Economics Topic: Energy & Climate Date: July 15, 2021
Read article Download PDF
 

External Publication

Building the Road to Greener Pastures

How the G20 can support the recovery with sustainable local infrastructure investment.

By: Mia Hoffmann, Ben McWilliams and Niclas Poitiers Topic: Global Economics & Governance, Testimonies Date: July 15, 2021
Read article More on this topic More by this author
 

Opinion

‘Fit-for-55’ package: Squaring the circle

The European Union finds itself at the centre of a three-dimensional puzzle. Burdens need to be shared between 450 million citizens, 25 million businesses and EU countries in a way that is acceptable to enough of them.

By: Georg Zachmann Topic: Energy & Climate Date: July 15, 2021
Read article More by this author
 

Blog Post

Fit for 55 marks Europe’s climate moment of truth

With Fit for 55, Europe is the global first mover in turning a long-term net-zero goal into real-world policies, marking the entry of climate policy into the daily life of all citizens and businesses.

By: Simone Tagliapietra Topic: Energy & Climate, European Macroeconomics & Governance Date: July 14, 2021
Read article More on this topic More by this author
 

Blog Post

The EU green bond standard: sensible implementation could define a new asset class

The proposed EU green bond standard will be less prone to ‘greenwashing’, and the widest possible set of issuers and jurisdictions should be encouraged to use the standard.

By: Alexander Lehmann Topic: Finance & Financial Regulation Date: July 13, 2021
Load more posts