Just Transition Mechanism

The new European Cohesion Policy Program 2021-2027 lists among its priority preference areas also green and low-carbon Europe in order to strive for a greener, cleaner and climate-neutral European Union. There are currently 12 countries in the European Union with 41 coal regions and so 185,000 workers are directly employed in the coal industry, and an additional 53,000 workers in coal-fired thermal power plants. All coal regions face the same phenomena, such as lack of skilled labor, deindustrialization and high labor costs, which prevent them from reaping the full benefits of changes in industrial production. The European Union has also set itself the goal of establishing a climate-neutral economy in accordance with the Paris Climate Agreement, which includes, among other things, the gradual abandonment of the use of coal for energy production. The coal regions will therefore need to be economically restructured, because otherwise they are at risk of suffering negative social consequences and a decline in economic activity due to the abandonment of coal mining. Some regions, where the restructuring of the economy after the abandonment of the coal industry was not successful, have already experienced such consequences. For all these reasons, the European Union established the Just Transition Mechanism, with a purpose to mitigate the social and economic consequences of the transition to a climate-neutral economy, which must take place as fairly as possible.

The  three pillars of Just Transition Mechanism:

The first pillar of the mechanism is the Just Transition Fund, within which grants will be available to applicants. The total budget of the Fund at the EU level is expected to be around 17.5 billion €. Of this, 74 million € of grants will be expected to be available for the Zasavje region. Financial resources from the Fund will be available from the EU 2021-2027 budget and from the Next Generation EU instrument. The level of financing was determined according to the level of development of the region in which the projects are implemented.  In Zasavje region the level of financing is up to 85%. State aid rules will also be taken into account when allocating funds. Beneficiaries from the Fund are both entities under public law (public institutions, public agencies, municipalities) as well as entities under private law (SMEs and large companies).

The dedicated scheme within the InvestEU program presents the second pillar of the mechanism and is primarily intended for private investments. The InvestEU program supports a wide range of investments - from energy and transport infrastructure to economic diversification and social infrastructure. Within the framework of the scheme, loans will be available, and it is assumed at the EU level that they will generate somewhere between 10-15 billion. (mainly private) investments.

The third pillar of the mechanism are public sector loans guaranteed by the European Investment Bank. 1.5 billion € of grants from the EU budget will be available for investments in the public interest in combination with 10 billion € loans from the European Investment Bank, which should mobilize between 25-30 billion € of public investments. The instrument will be available exclusively to public entities and will support projects that do not generate a sufficient flow of private funds for commercial financing.

The funds of the third pillar of the could primarily, but not exclusively, support measures that will contribute to:
- better connectivity of the region, especially in the sectors/areas of public transport promotion; infrastructure and promotion of soft measures for the development of sustainable (local) mobility; development and modernization of the region's connections for the needs of economic growth; active mobility; etc. Among the key projects identified by stakeholders of the Zasavje region is the reconstruction of the (regional or main) road Zidani most - Hrastnik, which will ensure the connectivity of the region to other regional centers and enable the region to be connected to the planned third development axis, which currently represents an obstacle to the diversification of the economy . For the planned reconstruction, which would be carried out in phases, it is also planned to obtain the funds.of the 3rd pillar of the Just Transition Mechanism.
- the decarbonisation of the region, namely in the following sectors/areas: efficient use of energy in all sectors, renewable energy sources; promoting self-sufficient local communities; building capacities to store surplus RES energy (including the use of green hydrogen); digitization and establishment of smart energy infrastructure; relevant training and education; and in the field of urban renovation and regeneration, rehabilitation and decontamination of land and ecosystems, etc.

The use of funds from the Just Transition Mechanism is defined in the Regional Plan for the Just Transition of the Zasava Coal Region, adopted at the end of 2022. The regional plan is a program document in which determines that the restructuring of the Zasavje region will be supported in four areas: energy, economy, improving the connectivity of the region and human resources. Most operations will be supported through public tenders while some operations will be supported through the instrument of direct confirmation of the operation. You can find the regional plan for the just transition of the Zasava Coal Region here (link).

Zasavje region