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The 27 members of the European Union approved on Monday the regulation establishing the so-called Just Transition Fund to help fossil fuel-reliant economies in the bloc move to greener energy, clearing the final hurdle for the fund to launch.
The Just Transition Fund (JTF), worth US$21.3 billion (17.5 billion euro), is one of the mechanisms the European Union will use to help its member states to work toward the EU-wide climate goal of achieving net-zero emissions by 2050.
Under its Green Deal, the EU pledged has pledged to support investments in sustainable businesses, technologies, and solutions and in greener energy and electricity generation. The Green Deal also includes the so-called Just Transition Fund to support with money packages regions and/or countries heavily reliant on coal.
The EU member states agreed that the fund would finance projects to alleviate the social and economic costs for communities across the EU that are heavily dependent on fossil fuels or greenhouse gas-intensive industries and need to diversify the local economy.
Money from the fund cannot be used for any fossil fuel development, not even natural gas, which the EU has started to see as a part of the problem, not the solution, in the energy transition.
The JTF “aims to prevent widening disparities by investing in territories which need to phase out the production and use of coal, lignite, peat and oil shale or transform heavily polluting industries,” the EU said on Monday.
Poland and Germany are expected to be the biggest beneficiaries of the fund, considering their still extensive coal industries and regions relying on coal for employment and economic growth.
“The success of the European Green Deal rests on us mitigating the consequences for those most affected by the decarbonisation of the economy. The Just Transition Fund will provide much needed support to companies and workers at local level, so that we can combat climate change together as a Union, leaving no one behind,” Nelson de Souza, Portuguese Minister for Planning, Council presidency said in a statement.
Portugal holds the six-month rotating presidency of the EU until June 30.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.