Just Transition Fund

The Just Transition Fund (JTF) is a European Union financing instrument designed to cushion the social and economic impact of the transition towards a climate-neutral economy.

Created under the European Green Deal, its main purpose is to support the regions and communities most affected by the shift to a low-carbon model, particularly those dependent on fossil fuels and carbon-intensive industries such as coal, lignite, oil shale and peat. For the 2021-2027 period the JTF has a budget of around €17.5 billion (€7.5 billion under the EU long-term budget and €10 billion originally financed through NextGenerationEU).

Why is the Just Transition Fund needed?

• Regional fairness: not all EU regions have the same economic capacity to absorb the closure of mines or power plants.
• Social protection: the move to a greener economy must minimise job losses and help workers move into new roles.
• Climate goals: the JTF supports decarbonisation by financing sustainable projects in vulnerable areas.

What the JTF finances

• Industrial transformation: support for green sectors and digital modernisation.
• Training and reskilling: programmes for workers affected by the closure of polluting industries.
• Economic diversification: incentives to attract new investment to affected regions.
• Environmental rehabilitation: restoration of land and ecosystems, including former industrial sites.

Who can benefit

EU Member States prepare Territorial Just Transition Plans that identify the most vulnerable regions. Once these are approved, funding can reach:

• local and regional authorities;
• businesses, SMEs and entrepreneurs;
• non-profit organisations and research centres.

How it fits into EU climate policy

The JTF is the first pillar of the wider Just Transition Mechanism, alongside a dedicated InvestEU scheme and a Public Sector Loan Facility. Together with national co-financing and other EU funds such as the European Regional Development Fund (ERDF) and the European Social Fund Plus (ESF+), the Mechanism aims to mobilise at least €100 billion in investment over 2021-2027.

Challenges and criticisms

• Conditionality: only projects aligned with climate-neutrality objectives are eligible.
• Adequacy of funding: some regions fear the amounts fall short of the scale of their needs.
• Tight timelines: the transition has to happen quickly to keep the EU on track for its 2030 and 2050 targets.

The Just Transition Fund is designed to make Europe's decarbonisation inclusive and fair, protecting vulnerable communities while supporting green job creation. Its success depends on close cooperation between EU institutions, national governments, industry and civil society. At Manglai we help companies understand EU climate policy and prepare their sustainability reporting. Discover how Manglai can help you.