Fact Sheets on the European Union
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Just Transition Fund

This fact sheet explains the aims of the Just Transition Fund, a financial instrument within the EU’s cohesion policy that provides support to territories facing serious socio-economic challenges arising from the transition towards climate neutrality. It outlines why the fund was established and how it is managed and financed. It concludes by explaining Parliament’s role in shaping the Just Transition Fund, including its part in the negotiations on the regulation that establishes the fund.

Legal basis

Objectives

The Just Transition Fund aims to:

  • support the territories most affected by the transition towards climate neutrality;
  • prevent an increase in regional disparities;
  • alleviate the impact of the transition by:

To achieve these objectives, the fund supports investments in:

  • digital connectivity;
  • clean energy technologies;
  • the reduction of emissions;
  • the regeneration of industrial sites;
  • the reskilling of workers;
  • technical assistance.

Background and structure of the Just Transition Mechanism

The Just Transition Fund is one of the European Union’s key tools to support regions in the transition towards climate neutrality by 2050.

In December 2019, the European Commission adopted a communication on the European Green Deal, which set out a roadmap for a new growth policy for the EU. As part of the European Green Deal and with the aim of achieving the objective of EU climate neutrality in an effective and fair manner, the Commission proposed the creation of a Just Transition Mechanism, including a Just Transition Fund. It said that the Just Transition Mechanism should focus on the regions and sectors that are most affected by the transition due to their dependence on fossil fuels, including coal, peat and oil shale, and on greenhouse-gas-intensive industrial processes.

The mechanism consists of three pillars:

  • the Just Transition Fund;
  • a dedicated scheme under the InvestEU programme;
  • a public sector loan facility provided by the European Investment Bank to mobilise additional investments in the regions concerned.

The Just Transition Fund primarily provides grants. The dedicated transition scheme under InvestEU crowds in private investments. European Investment Bank activities should leverage public financing.

Support provided through the Just Transition Fund is focused on the economic diversification of the territories most affected by the climate transition as well as on the reskilling and active inclusion of their workers and jobseekers. The eligibility criteria for investments under the other two pillars of the Just Transition Mechanism are broader in order to also support activities related to the energy transition.

Territorial just transition plans

The Just Transition Fund is implemented under shared management rules, which means close cooperation with national, regional and local authorities. In order to access Just Transition Fund support, Member States have to submit territorial just transition plans. These plans outline the specific intervention areas, based on the economic and social impacts of the transition. In particular, these plans have to take account of expected job losses and the transformation of the production processes of the industrial facilities with the highest greenhouse gas intensities.

Budget and financial rules

The Just Transition Fund provides support to all Member States. The allocation criteria are based on industrial emissions in regions with high carbon intensities, employment in industry and in coal and lignite mining, production of peat and oil shale, and the level of economic development. Member States that have not yet committed to implementing the objective of achieving climate neutrality by 2050 will only be awarded 50% of their planned allocation. The level of EU co-financing of projects is set according to the category of region in which these projects are located. For less developed regions, it is set at a maximum of 85%, for transition regions 70% and for more developed regions 50%.

The Just Transition Fund has an overall budget of EUR 17.5 billion for 2021 to 2027. EUR 7.5 billion is financed under the multiannual financial framework (the EU’s long-term budget) and an additional EUR 10 billion is financed under the NextGenerationEU instrument.

Member States can complement their Just Transition Fund allocation with the resources allocated under the European Regional Development Fund and the European Social Fund Plus.

Role of the European Parliament

During the negotiations on the Just Transition Fund proposal, Parliament was particularly concerned about the socio-economic impact of the transition towards a climate-neutral economy and proposed measures that would help the process to take place without disparities between regions growing any further, and without leaving anyone behind.

Parliament suggested broadening the scope of the activities that can be financed under the Just Transition Fund in order to include those of micro-enterprises, universities and public research institutions, as well as digital innovation and activities in the areas of education and social inclusion. This would enable regions, people, enterprises and other stakeholders to effectively tackle the social, employment, economic and environmental consequences of the transition to a climate-neutral economy. In addition, Parliament proposed a series of exclusions for certain economic activities, emphasising the importance of the social aspect of the fund.

In 2020, Parliament proposed that a substantially higher budget be allocated to the Just Transition Fund. This allowed transfers from the European Regional Development Fund and European Social Fund Plus to be made on a voluntary basis. Parliament also recommended the addition of a ‘Green Rewarding Mechanism’, which can allocate additional funding to Member States that manage to reduce their greenhouse gas emissions at a faster-than-expected rate.

The final text of the Just Transition Fund Regulation was formally adopted by Parliament on 18 May and by the Council in a vote on 7 June 2021. The final act was signed on 24 June and it came into force on 1 July 2021.

On 12 December 2023, Parliament adopted a resolution on reshaping the future framework of EU structural funds. In the resolution, Parliament called for the extension of the Just Transition Fund in the programming period post-2027. Parliament also called for an increase in funding for the Just Transition Fund in order to support regions highly dependent on sectors undergoing a deep transformation, such as the automotive sector.

On 10 September 2025, Parliament adopted a resolution on the role of cohesion policy in supporting the just transition. In the resolution, Parliament called on the Commission to facilitate the creation of special economic zones under the Just Transition Fund in regions affected by job losses. Parliament also called for the Just Transition Fund to promote access to training and apprenticeships, especially for women, young people and marginalised communities. Finally, Parliament stressed the need to simplify administrative procedures and ensure the creation of quality jobs.

On 18 September 2025, a regulation was adopted amending the Just Transition Fund Regulation and the regulation on the European Regional Development Fund and Cohesion Fund, as part of the mid-term review of the funds. As a result, the Just Transition Fund Regulation was amended to include an article that states that the Commission will pay, in 2026, 1.5% of the total support from the European Regional Development Fund, the Cohesion Fund and the Just Transition Fund, pursuant to the decision approving the programme amendment, as additional one-off pre-financing. This percentage of additional one-off pre-financing will be increased to 9.5% for programmes that fall under the EU’s Investment for jobs and growth goal and that cover one or more NUTS level 2 regions bordering Russia, Belarus or Ukraine. However, it only applies to programmes that do not cover the entire territory of the Member State concerned.

This fact sheet is prepared by the European Parliament’s Policy Department for Regional Development, Agriculture and Fisheries. For more information, please visit the website for the Committee on Regional Development.

 

Frédéric Gouardères